The Rand Merchant Bank has observed that the Zambian currency was expected to record tremendous appreciation against major foreign currencies in the next few months.
Africa Analysts Rand Merchant Bank Strategist Celeste Fauconnier said the Zambian Kwacha is likely to appreciate because of the Bank of Zambia’s intervention in financial economic policies and the stability of copper prices on international market.
Ms. Fauconnier said Zambia’s copper prices were still high stating that by 2014, the nation’s currency was expected to register great improvement thereby improving the nation’s economy.
She disclosed this development during a stakeholders’ breakfast meeting held at Radisson Blu Hotel in Lusaka yesterday.
And Ms. Fauconnier has noted that the rebasing of the Zambian currency has many benefits such as easing the way transactions are conducted and simplifying accounting processes.
She added that the rebasing of the currency has further stimulated both local and foreign confidence in the Kwacha as well as lessening the cost of customising standard accounting offering on the market.
She further explained that the value of the Kwacha will be supported by strong growth in copper production, large foreign inflows, high public external borrowing and relatively low domestic inflation.
On macro economic implications, Ms. Fauconnier noted that the gross domestic product is expected to grow from 7 to 8 percent over medium term.
She observed that large infrastructure investment, expansion in mining projects, stable copper prices and emerging consumer class were poised to record tremendous growth in the country.
She also pointed out that the public expenditure growth should be tightened in the year 2014 to 2015 to prevent an unsustainable increase in the debt stock.
ZANIS
The Kaponyas on Katondo street are loving this new law. Their business will boom as people will revert to them if business men can’t get their hands on dollars from the normal channels. Any major appreciation in the Kwacha currency will be temporal as economic fundamentals are still flawed. Zambia is still a net importer of goods with a negative trade account balance plus with inflation begining to rise to double digits due to fuel, electricity and maize increases. In my opinion this analyst from RMB doesn’t understand the Zambian economy. All these inflows have to go back out at some point so short term wise there will be fluctuation but the norm will prevail so don’t get excited.
for all I know, we are net exporter. every time we get trade surplus due to one comodity – Copper.
@net importer, do you understand what you are talking about iwe troglodyte?
Mr Common Sense, you ve got it spot on. This is very Short term.
My friend, dont be so sarcastic because you work for someone to call us who are own bosses Kaponya from katondo. We might even be better than you who has to suck up to your boss to keep your lousy job. Am blogging from home while you need to go for free net at office, sucker.
From my understanding the new instrument is a positive in collecting data about trade practices in the country. The flow of currency and it’s use and impact on forex transactions.
This policy will help in Ratings by the markets. The next time we are rated, i come speculate will be awarded a BB+ or higher.
What the government decides to do with the data collected is the worry expressed by many players.
But if a business is a good corporate citizen, then it would worry less about normal procedures in developed nations.
The katondo guys can not move the market. The Zambian kwacha is fully flexible and as such demand from Katondo street can not move the market. That used to happen in the past not now. Actually, the autoregressive abd cointegration studies have fully supported this owing to non currency substitution.
Phillip Mushe
PhD Economics Candidate
University of Chicago
Fyabufi fye ifi. Mwilayumfwisha bwino ba fi colour. Pa Zed fyalipena fye. Tafyaka chinje iyo!!
Dutch disease. Non commodity based exports will suffer. An appreciation of a currency is always a double edged sword.
Now were are the figures in which the Kwacha and the dollar are trading at?
Mirracles do happen from time to time!
Net importer sure…. Even security guards and waiters are imported from china, pastors from Nigeria for God’s sake….,Zambia shame
Useless and dull negative Zambians hiding in cleaning plates and distributing newspapers at 02 hrs in the diaspora. Whatever is done for the good of Zambia to them is baseless. Leave us alone as we make money and build mansions while you safer in those foreign lands.
Peace and Prosperity to Mother Zambia.
As rightly pointed out by @Mr Common Sense this could lead to an increase in the black economy however the POSITIVE is that the money for exports especially copper has to come into the country as hard currency first before leaving again to owners with valid reasons and approval recorded by BOZ. So local Banks will be licking their lips as they stand to benefit with their transaction costs.
Manje paja…A strong currency does not import inflation ayiiii??
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