The rapid depreciation of the Zambian kwacha against the dollar is hiking the cost of importing fuel, despite a fall in fuel prices on the global market, Zambia’s Ministry of Energy and Water Development said today.
The kwacha has depreciated by 17% against the dollar since January, according to Bank of Zambia data.
The depreciation of the currency is attributed mainly to reduced export earnings from copper and cobalt.
Copper and cobalt mines, which normally consume up to 50% of Zambia’s imported fuel, are suffering from the high prices. However, they have reduced fuel consumption as the effects of the global economic downturn have caused the miners to scale down their operations since December.
The cumulative depreciation of the kwacha against the dollar hit a record 73% in February to reach ZMK5,500 to $1, the lowest level in the country’s recorded history. In June, the kwacha was trading at an average of K3,186 to a dollar. Last week, Zambia’s main opposition party called for the impeachment of President Rupiah Banda accusing him of failing to address numerous economic, political and social problems facing the country.
According to Zambia’s finance ministry, the kwacha depreciation started, following the illness and subsequent death of President Levy Mwanawasa which created political uncertainty, hurting investor confidence coupled with increased demand for the dollar arising from fuel, corn and fertilizer import requirements. Zambia is Africa’s leading copper producer and the country depends on copper exports for up to 70% of its foreign revenue earnings.
The energy ministry has warned that local fuel prices may be revised upwards if the kwacha continues to depreciate.Energy Minister Kenneth Konga has however assured Zambians that there will be no fuel shortage.
[Dow Jones Newswires,]
Too bad. Zambia missed an opportunity to enjoy cheap fuel. Now fuel prices are rising steadily on the global market after OPEC cut production and USA inventories fell. Add ZMK depreciation, one can only expect fuel prices to go up in Zambia. This is likely to happen as soon as Indeni begins to refine new crude oil consignments.
why do the government only see problems in every situation?they only talk about problem in the country. they must give the country hope by being positive in every situation.
Maintaining the parity value of a currency against other currencies is impotant if you arean import oriented country. However if you want to encourage exports it is better to allow the currency to adjust and find its proper level
This is called “Floating” of the exchange rate. The BOZ has been applying this monetary policy for a long time now. Unfortunately it hasn’t worked for our situation.
Yes too bad! Failure to address problems on the C/B will result in untold suffering. But RB hates the C/B coz we didn’t vote for him and he’s out to sort out whoever was agaisnt him during the elections. Unfortunately even his globe trotting will end if continues with this attitude coz the mines are the backbone of this country.
We are clearly in trouble as usual our ministers are parroting the symptoms and no solution in sight. It is very clear that all the investor confindence LPM laboured so much to build has evaporated.What with the mealie meal queues growing longer and the Kwacha becoming useless .We should blame the MMD NEC for adopting a unipist as our candidate.Now we have people that don’t even know the price of a hoe let alone fertiliser dictating the price of maize.I shudder to think of what will happen when our peasant farmers start growing maize for their own consumption.because of the raw deal they have gotten this year.I AM SURE SOMEBODY THINKS WE SHALL IMPORT!!!.WHAT HAPPENS TO THE KWACHA!!!OOH GOD
Well good @ identifying problems but extremely poor @ attending to them.Today you tell us you have surplus diesel tomorrow you tell us you need to import diesel.What a govt,it takes little intelligence if thats all one has to tell that nyama Soya is driving the country backwards in longstrides.
indeed taking the country backswards. what do you expect of a president who will give you an answer like “i dont know, or I have no idea”. awe sure!
This whole thing hinges on Management by Crisis. This is the time those who are charged with the responsibility of importing fuel make their quick bucks. As long as we remain non proactive and resort to fire fighting methods when dealing issues of national importance this problem will never end. I wonder if these guys even think of creating strategic national reserves either in terms of food or fuel or other resources of national survival. Copper & Cobalt prices are not as time of privatizing the mines. There is just too much panic, such situation should present challenges for every serious Zambian and come out as a strong nation, we leave things to chance and foreigners to fix for us.
Now these lackeys are telling us fuelprices will or might be increased, a short while ago another heading read fuel to be exported. Can’t understand the rationale in all this. what we need is affordabel fuel for our cars. full stop not any more hikes when everywhere (other stable countries) fuel prices coming down.
Let me go to the other computer LAN I will comment later pantu this exuse ya kwacha yanitinka.
Lets all march protest and IMPEACH RB
We cannot let Zambia that was once listed as having made major improvements compared to all developing countries go to the dogs. A country is not about one person and their ambitions.
LT put a poll to find out how people feel.
Prove your point.All economies in the world are affected.Ask the icelanders,they will tell you that they want to replace their currency,the rouble in russia is depreciating and worse still the oil and gas prices are falling evreyday
Prepare for ard times aead.
Prepare for hard times ahead
This is expected.
If you look around the globe, it is hard to find a currency that has not been affected. Indeed excessive defense of the Kwacha will be artificial and unsustainable even over two months. Just ask Russia how they gave up on that stance late last year when they lost almost 20% of their reserves. The global crisis has caused social unrest from Iceland to Eastern Europe. As expected some will seek political capital, see what happen to Surhato in Indonesia during the Asian Crisis. My point? Let the Kwacha represent the fundamentals, with the authorities attending to currency speculation while providing incentives to diverisify the economy.
You have a point on that.the rouble has depreciated by over 40%
Ba matworld mudala mwatinkiwa ne nkani ya kwacha. Awe naine yanitinka.
Now Mr learned minister, you have knowledge of what happened to kaunda in the 70’s when zambia’s economy was fully dependent on copper.30 years down the line,you have not devised alternative economic strategies to diversify our economy so that the dependency on copper can be drastically reduced.Please you people try to serve Zambia and if you fail try to resign on moral grounds.It happens everywhere,.
This makes great sense to anyone..