The Zambian kwacha extended losses on Tuesday, falling more than 2 percent to its weakest since May 2014, as concerns over President Edgar Lungu’s health affected market sentiment in Africa’s No. 2 copper producer.
President Lungu traveled to South Africa for further medical tests after a suspected narrowing of the food pipe caused him to fall ill over the weekend.
The kwacha touched 7.1450 against the dollar, and traders cited Lungu’s health as a catalyst in its decline.
“With two of the presidents dying in office in recent years things are a little jittery,” said Zambia analyst Irmgard Erasmus at NKC Independent Economists.
Concerns over Zambia’s mainstay copper business, which remains at risk after government hiked mining royalties in January, has also dampened the outlook for the kwacha. The higher royalties triggered a dispute with companies such as Glencore and Vedanta Resources.
Plans by the government to relax rules that had prevented $600 million in tax refunds being paid to foreign mining firms, helped the kwacha recover briefly late last month, but the currency has since weakened because the dispute is yet to be resolved permanently.
“Still on-going is the new mining tax regime, with the political risk perceived to have risen in recent days,” Erasmus said.
There was huge dollar appetite from the corporates such as the mines companies, said analyst Maambo Hamaundu, as the copper price fell on the day driven down by falling demand from top copper consumer China.
Copper fell on Tuesday as the dollar hit multi-year highs against the euro and yen and as data showed increased factory sector deflation in China. A strong U.S. currency makes dollar-priced metals costlier for non-U.S. investors.
Source : Reuters
I would trust Rainbow to ensure they bring it back to 1:1 with the dollar
Believe that!
Welcome to the Rainbow Party, the future is today.
Thanks
Bb2014
Pabwatooo. Yeah yeah.
The thing is most of bloggers don’t understand economics ,when we tell you that what ever is happening in US and China economy,it will have impact on our currency and economy,some will say don’t talk about US and china, first of all the kwacha is performing badly because (1) the us dollar has been gaining its strength against any other currencies,oil prices has going down and means that other commodities will follow suit I.e platinum,iron ore ,copper and Gold ,this means which ever countries are producing such metals they have low production as the case with Zambia and this has triggered a major impact on the currency,already copper us traded at 5600 us from 7600 last year June.
i have always given sound advice…….
lets start using US Dollars like in Zimbabwe
but you guys are still not taking my advice on board.
after 50 years of independence, we still cant tackle this kwacha exchange price?
its really a shame……lets bury our pride and use USDollars
@KABOKO…I am sympathetic to your sentiments on this important issue. But my economic instincts would say no to using the dollar or any other currency that you dont have full control. If we use the dollar like Zim we are basically surrendering our economy to the Federal reserve who will be able to set interest rates on our behalf. This would mean that Zed cannot issue bonds like they have done in the past. Elo GRZ wont be able to print more money should some sort of Quantitative easing be required. The Kwacha falls because the market has no confidence in the economic direction of our country also dollar strength across the board. With commodity prices about to go up watch the kwacha go in flames. We dont produce anything and thus cant defend ourselves with dollars
Imwe bantu adopting another country’s currency doesn’t solve your economic problems. Zimbabwe is still very deep in problems. In any case all emerging markets currencies are being similarly affected because of the strengthening of the dollar and the pound. Growth is stalling in emerging markets while the developed markets are strengthening. Where Iam the Rand has fallen to a 13 year low.
Of course Zambia’s debt is burdening the economy. Our loss of tax from mining industry isnt helping. Our budget deficit is expanding
This is not true. In fact other currencies are depreciating faster than the kwacha against the dollar.
Iwe the fact is Kwacha is not performing well, who cares if malawian kwacha or Naira….are not performing well too? You easily lose focus on whats being said.
For example? Giv us facts nochi ifyo weshibefye weka mune?
YA,EVEN CHI RAND THIS MORNING(SABC NEW).
I thought you would give an example;
Zambians and not all are playing with running of a country like football!! This power and peace we are misusing in the name of tribalism,one day some we’ll cry for it!! A head of state is an officer of officer but despite warnings, and because of greed,Injustices and selfishness,Mambilima and her relatives can give presidency to a sick and drunkard person on the expense innocent pipo to get positions!! As long as force and bloodshed prevails nothing can succeed!!OTHER WISE REPENT OR FACE THE WRATH OF GOD AGAIN! Anyway we are waiting for 2016!
VOTING 4 A SLOGAN USING A SLOGAN MILES WAS THERE U SAID NO HH CAME U SAID NO LUNGU CAME WITH A SLOGAN BUT BAD RECORD AND HEALTH U SAID YES UUUKO
lET THE ECONOMY BE RUN BY ALL zAMBIANS WITH DIVERT EXPERTISE. As long as a certain click of people think they will manage it, FORGET IT. We have some of the best brains in the private sector from the so called tribes that may not come closer to the government coffers, for these people have florished when they were in Government and even now they are in Private sector. Further these people from these prohibited tribes are doing very well in the
OmG, r we goin to survive,so no importin thinz anyhw,as thinz stand
AWE MWANDI CHABIPA.GOD HAVE MERCY UPON THIS NATION.
We predicted this months ago and the yahoos running the economy are doing nothing about this. Next we will not have enough to pay for basic imports like fuel and watch what happens. Elo mwala Dancer NYAU TUNE YAKWA EDGAR WITH RB AT BASE. WE TOLD YOU SO.
…M****** mwe ba PF!!!
No clue on matters of the economy.
Busy stealing
Useless merger with MMD
Useless fights with Mutembo. A tribunal that will not yield anything.
How many tribunals did SATA come up with and how many people where dismissed immediately they submitted the same?
Be real; Zambia has gone to the dogs or is it the dogs that have come to Zambia.
VIVA UPND
Chanda Chilengu you bark exactly like a dog.
The secret lies in increased productivity and emphasis on diversified exports other than just copper. Now if our leaders spend more time at the outpatient ward and politicking when they are well, there is no way our economy would improve. It was good to see our president being seen off at the airport as he was leaving for South Africa. How I wish, that plane was taking him to Northern or North Western or anywhere else in this country to launch some monumental development project. But no, it was for him to seek medical attention abroad.
But this is as expected, right?!
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EVEN AFTER BEING WARNED, PEOPLE STILL SHOUTED IFINTU NI LUNGU! GET READY FOR MORE HARDSHIP! THIS IS EXACTLY WHAT YOU VOTED FOR!
Its got nothing to do with Lungu. Perhaps with Sata but even that is debatable. Start building reliable industries. Dont depend too much on one commodity, raw commodity at that. Enhanced the raw product before selling it. Copper’s various products need to be produced in Zed. Why dont we have a bullet factory 50 years after independence? There is a big market for copper cables all around Africa we could have been selling to them. South Africa’s car industry needs copperwires etc etc
Will your HH give each and everyone of us ubunga and fuel , get over your self IFINTU NI LUNGU Kolopa.com.
@c kasonde, I presume you are not an Idi0t, Kwacha fall has nothing to do with Lungu. The U.S. dollar is strengthening against all major currencies, even your free mason Jesus HH would not change nothing
It is not political but the domino effects of one strong currency and expect the Kwacha to receive more battering!! If the sterling (pound) has softened by approximately 23% against the dollar since October 2013 what do you expect from the volatile Kwacha?
Thank you @12 Mwenya, that is how we should be looking at everything, taking the global view. The problem with us Zambians is we tend to trivialize matters and focus them on a few non-issues. While all this is going on producing economies are trying to double up and exploit this scenario. In Zambia we just lament how fewer apples we will be able to buy from Pick n Pay…
why is it that upnd dweebs and dim wits want to make us believe that their stone faced Mephistopheles is the one to lead this country to some sugar candy mountain? Zambia is not an island where we cannot be affected by global trends. Our own policies, good policies meant to promote a strong grip on our economy have to be supported by well meaning Zambians even if we run out of fuel for our salaula toyotas. Jump on a bus!
You`re just talkative with no brains. You`re given the opportunity govern you still complain of HH. Who say running a country is as easy as mobilizing a rally in Chawama. You have not see the worst yet.
When people told you to vote out this government you were saying ifintu ni Lungu.You even called tribalist the wise who foresore what will happen but when the unwise outnumber the wise these are the results.The town illiterates and educated unwise you have proved that you are the least thinking people.Viva to all those who voted for UPND.
May be next time we share vote wisely not following RB and tribalism.
Has fuel and the exchange rate only affecetd the oppostion or only Tongas?
Unless town Zambians.This is what you voted for.
@ virgin angel, 12mwenya and kalok.
A simple analysis of world commodity and currency trends is all it takes to see that this was coming. The government should then have taken steps to mitigate the effects of a strengthening Dollar. First and foremost they need to apply austerity in fiscal effects that require foreign exchange. Secondly reduce Kwacha supply so as to slow down inflation and unnecessary pressure on the economy. Capital investment requires a lot of dollar so we need to encourage more FDI. Stop trying to prop up the Kwacha by diverting borrowed money to import reserves. As for the argument that it’s all because of a strengthening Dollar why are we loosing ground against other currencies not just the dollar? (Indian rupee and the Rand for example)
Zambia will never develop because us Zambians think one person will develop the country. For your information the US Dollar has gained 23% because of the US economy that is doing well and the US is even thinking of increasing the interest rates. What is so special about the Zambian Kwacha when all the major currencies are tumbling to the dollar?? Don’t cheat people.
@Tamblife explain why we dropping against the indian, South African, Kenyan and Japanese currencies.