BANK of Zambia (BoZ) Governor Denny Kalyalya says the central bank will take necessary measures to curb the depreciation of the Kwacha.
He said BoZ has already instituted measures such as open market operations to stabilise the Kwacha.
Dr Kalyalya said at a media briefing yesterday the central bank may also consider adjusting the reserve ratio from 14 percent to help strengthen the local unit.
“We will continue to regulate the amount of Kwacha in circulation to try and control the activities. In the current circumstance, where there is high demand and less supply of dollars, we will try to tighten the liquidity,” he said.
Dr Kalyalya said the 19 percent Kwacha depreciation in the last three months can be attributed to a drop in copper prices on the international market and non-traditional exports.
He said BoZ will continue to review the situation and take necessary measures to address the volatility and restore stability.
Dr Kalyalya further said foreign exchange supply by the mining sector has also tumbled relatively to demand.
He, however, said despite some challenges in the foreign exchange market, there are also tremendous opportunities to grow the economy and reduce poverty levels in the country.
“On our part, we will continue to develop the financial sector and maintain a stable macro-economic environment that supports these important goals. Foremost amongst this commitment is to maintain price and financial system stability,” Dr Kalyalya said.
He also said Government’s infrastructure development projects, despite being very important, have led to higher budget deficits and increased demand for domestic and foreign resources.
Ba dan you have been compromised and bribed by PF. Why cant you call a spade a spade so you maintain your credibility?
Now let me wire my dollars to zed when exchange rate is still high.
Plain and simple government expenditure on infrastructure projects that is dependant on foreign borrowing
#prayforzambia
May Zambians stop being glib and recognize that the Kwacha is not the only currency down against the US dollar. In fact, the dollar is projected to catch up with the British sterling in the next 3 months. Get ready for harder times instead of making false promises.
@wanzelu, in the last paragraph he is spot-on. He could not say it better.
When HH was telling us that the infrastructure development the PF had embarked on was uncoordinated, chipantepante and chimbwi no plan. PF clueless cadres were all over disputing HH. Now, a presidential appointee in the name of BoZ Governor has just reiterated what HH has been telling us. This country needs an Economic Manager and not the status quo. Ifintu na filungula bad!
Very true as No. 1 says. Denny please you are too good to be embroiled in this mess! Not that you should shirk the assignment you have been given, but act professionally not as a cadre for your own sake otherwise you will end up losing the good reputation and admiration you have earned through dedication and hard work.
Ndiwe chikopo. You don’t even know his name you just rush to make a comment. His name is not Danny for you to shorten it to Dan. His name is Denny Kalyalya. Please try to restrict your ukopo to UPND and not project it to the entire world.
Are we back in the market control itmes?
What happens when you sleep with a bitch with an STD?………. Zambia is sleeping and making love with Zim and getting loans for Zim! It’s no surprise we’re in this mess.
That is good move to strengthen the kwacha. Other currencies in neba are doing fine e.g. the TZ shilling has appreciated in the past few months. Why? The MK also has appreciated. So be Danny look at factors which lead to depreciation of ZK please.
The balances of Balance of Trade is negative -81.9
The rate is about ,March 2015 Up 7.66 ZMK from 6.9 February 2015 averaging 3.57 from about 1992
This is the highest it has gone to erode value against the dollar, since low October 1993
The copper , since its supper cycle prices in the recent past continues to fall from Copper and points to even depressed prices on the exchanges
5,879.25 March 2015
5924 Feb 2015
‘”key decisions to go back to 1993 levels”‘
@Jonathanmhango Financial Analyst: C”mon now, does being a financial analyst mean writing gibberish no one can make any sense out of?
“…The copper , since its supper cycle prices in the recent past continues to fall from Copper and points to even depressed prices on the exchanges…”
What the heck are you trying to say here? Keep it simple ‘bululu’ and you will never go wrong!
A few tricks that can stabilise the Kwacha quickly :
1. Reduction in ministrial structures and budgets
2. Address good governance issues including constitution /Mutembo
3. Investor confidence – simply start direct talks with key players
4. Reduction in foreign travels by head of state
What about lowering interest rates to bust SME development which in turn creates jobs and tax revenue instead of “mopping-up” liquidity to finance budgetary shortfalls?
#4.1 That could be a most well-come move too as long as funding is not channelled through political structures as it is at the moment that in the end, have failed to reach the intended targets.
0%. Non of these are related to the Kwacha’s fall.
Spot on especially no. 1. Honestly we don’t need the so many ministers who are just fattening their pockets. EL’s first mistake!! If he had reduced the size of his cabinet, he could have won some favour from the donor community. He lacks advice or his advisors (KK, RB & Mugabe) want him to fail.
I think our Central Bank (BOZ) will doing well to move as quick as possible right at the first signs of trouble than wait until the damage is done. There are plenty of financial instruments that BOZ can use to intervien in many of these circumstances
Thou the super cycle will rebound but the time frame to mismatch and reposition is a long-term within the cycle of at least above 10 yrs of GDP growth forecast required to turn around
MY BROTHER TAKE IT EASY. DO NOT DESTROY YOUR REPUTATION BY TRYING TO SHOW THAT YOU ARE A SUPER MAN. I DO NOT ENVY YOUR APPOINTMENT AT THIS POINT IN TIME. THE POLITICAL ENVIRONMENT IS NOT CONDUCIVE FOR YOU TO PERFORM AS DR. FUNDANGA DID. TIMES AND THE PEOPLE IN LEADERSHIP ARE DIFFERENT. THE LEADERSHIP THAT DR. FUNDANGA WORKED WITH HAD POLITICAL WILL AND A COMMON VISION FOR THE COUNTRY WHICH ARE LACKING IN YOUR CASE. YOU MAY MEAN WELL BUT ARE THE OTHER PEOPLE IN THE TEAM OF THE SAME THINKING WITH YOU?
I can’t put it any better except to say I congratulate for your appointment. I feel sorry for you in the current political set-up as Mano Mambulwa pointed out.
Kalyalya may have the calibre to correct things, but the fiscal policy and the leadership to drive corrective policies is still asleep as they don’t have what it takes to manage and economy…if someone failed to run his own law katemba, and suddenly you scale him up to manage a country’s economy, the conclusion is clear…free falling currency @ 9.8m per square second.
I am so lucky and glad that I earn in Dollars! may the Kwacha continue to rot. Just last month $1,000 was slightly above K6,000 but not this translates into K7,600!!! Good 4 me!
I agree with the short-term/immediate/ monetary policies you are planning to inject in the system. But, what long term plan do we have Sir? Are we going to harmonize our monetary policies with the fiscal ones? How do we diversify our export market? How do we boost investors confidence?
Jack of all trade but master of none. Our problem is that we always comment using an emotional political formula. Certain issues require thorough research and logistical analysis. The measures analysed by the governor among others can surely curb the problem if effected. Issues taking a global trend need deeper analysis. Sometimes we become part of the problem in an attempt to solve the real problem.
Last year the statutory reserve ratio was increased and the kwacha temporary gained strength, but if adjusted again then the CIC -currency In circulation will be reduced further. This will have an adverse effect on employment levels and increasing poverty levels.
The govt should consider limiting the money that should be externalised to a maximum of 40 percent of profits for multinational companies. Importation of apples, potatoes, beef, chicken , and services like multichoice movies, roads,second hand cars, spares, and cooking oil should be suspended until our economy improves. We need to retain a lot of money in our economy.
We need to invest more in the energy sector and export power to increase dollar inflows.
Ba MK I think you live in utopia.
MK are you serious with your suggestions?
Dr Kalyalya speech and outlook is correct in the short to medium term
If you look at the moodys the fitch and the poors they all converge in ratings scenario on one point
Then he is mindful of ”carry trade tactics”‘ as one dips in reserves to pump up the currency
Then he talks about the rebalancing of fiscal and monetary policy I think it will be a plus towards the addressing of the shorterm issues affecting the economy
Some bloggers on this site should make their way to Zambian Watchdog where their ineligible comments will be welcome. I enjoy the respectful dialogue on this forum but it appears as though immature debators are now finding their way to this site, before we know it, we may start seeing stupid posts like “Hit Like if you didn’t finish reading” or “Hit lyk if u r jst hre for da coments.” Travesty.
we have failed miserably as a country in this matter as in others like we Scrapped the national airline, we have no proper Hospital as all the apamwambas keep running to S>Africa for medical, our education system is collapsed etc etc
lets just use Dollars instead chapwa……our friends in Zimbabwe are now progressing and developing….
The depreciation of the Kwacha cannot be fixed with simplistic attitudes and approaches that Kalyalya is suggesting. The issue requires sophisticated minds.
He needs look at the medium term targets addressing the Broad Money Though fiscal policy decisions will be a long way to respond to change and distribute wealthy/incomes to compensates though working in adding GDP numbers to the Growth and saving to make some return
I often times hear people talk the kwacha vs. the dollar but to really understand the effect of the rates movement we need to know the market size and composition locally and how it impacts the global
it will not do to address the rates but rather helpful also to understand the market size and composition of this forex market to effectively address either annually or yearly
Kalyalya has a new breath as I read…
He needs look at the medium term targets addressing the Broad Money Though fiscal policy decisions will be a long way to respond to change and distribute wealthy/incomes to compensates though working in adding GDP numbers to the Growth and saving to make some return
I often times hear people talk the kwacha vs. the dollar but to really understand the effect of the rates movement we need to know the market size and composition locally and how it impacts the global
it will not do to address the rates but rather helpful also to understand the market size and composition of this forex market to effectively address either annually or monthly
Kalyalya has a new breath as I read…
@sydney you are foolish.
lets then look at the ideal currency regimes that work and insulate us for long term and not fire fighting It must be a credible regime fixed with little durations with paired currencies worthy their sought irrespective of change unless fundamental grounds have shifted solidly like a tremor
I rest here and others can add to share thoughts
///
@ Jonathanmhango Financial Analyst
And? Bla, bla, bla……………..
Next time, please tray to explain unexplained in plain every-day English and not in useless donor-sponsored economist mambo-jambo.
Just FIRE the F00LISH old FOSSIL Chikwanda!
The Kwacha will IMMEDIATELY start appreciating.
This man has bankrupted Zambia once before, now we are letting him do it AGAIN?????
country men the dollar is just gaining thru out the world every one is complaining,you supporters for HH HE COULDNT HAVE BEEN LUCKY ,every one is affected and the government thru BOZ and other regulating institutions and tools is doing its best to mitigate this exchange rate issue..stop politicizing the issue by next month some measures currently being implemented will bear results…
The S&P 500 SPDR,Dow Jones Industrial Average SPDR,iShares Russell 2000 Index ETF
Most indexes you see last week moved as of Friday higher driven by the Feds The key movers this week as traders in assets will be the known US fundamental indicators that sends confidence sentiments in the markets Home sales, CPI, Labour and GDP numbers We need to have the same in out all shares,industrials,financials and alternative moving value and aligning value in line with such a powerful comments from our leaders taking losses and profiting losses as it were
We look forward to having commentary and comments that have local effect and assets move according to such “‘non powerful comments”‘
Watch the movements…
Check the changes in the following indicators in the US Financial Sector as they impact the global exchange platforms as pressure changes reflecting the funding and financing methods in the Us and impacting on global Pay particular attention to changes from January to March 2015 and see how it impacts in time
US Banks Credit Cards: Average Outstanding :Q3 2014 680.68B USD 1.85%
US Banks Earning Assets :Q3 2014 13.70T USD 1.26%
US Banks Estimated Insured Deposits Q3 2014 6.102T USD 0.33%
US Banks Gross Loans and Leases Q3 2014 8.162T USD 0.63%
US Banks Home Equity Lines of Credit: 90 Days or More Past Due Q3 2014 1.283B USD 5.36%
US Total Credit Market Assets Held by Domestic Financial Sectors Q4 2014 42.15T USD 1.46%
Check the changes in the following indicators in the US Financial Sector as they impact the global exchange platforms as pressure changes reflecting the funding and financing methods in the Us and impacting on global Pay particular attention to changes from January to March 2015 and see how it impacts in Zambias
US Banks Credit Cards: Average Outstanding :Q3 2014 680.68B USD 1.85%
US Banks Earning Assets :Q3 2014 13.70T USD 1.26%
US Banks Estimated Insured Deposits Q3 2014 6.102T USD 0.33%
US Banks Gross Loans and Leases Q3 2014 8.162T USD 0.63%
US Banks Home Equity Lines of Credit: 90 Days or More Past Due Q3 2014 1.283B USD 5.36%
US Total Credit Market Assets Held by Domestic Financial Sectors Q4 2014 42.15T USD 1.46%
The US market has depth in all asset classes and efficiencies quiet high reflecting the bid and ask spreads in the dollar to below 1% basis in the dollar exchange rate fluctuation Ideal currency with over the short to medium term register in loss of gains normally below 1% The gain on a kwacha to a dollar sales should be normally below 1 kwacha especially with volumes
Percent Change in the Last 24 Hours for the dollar and see the parity to the kwacha knowing the flows in demand and supply of the related currencies to the dollar below and how they impact the kwacha locally and globally
EUR/USD-0.04854%
USD/JPY-0.04995%
GBP/USD-0.37318%
USD/CHF+0.20105%
USD/CAD-0.21798%
EUR/JPY-0.09846%
AUD/USD+0.13499%
…
And, how all your comments can explain inflation of around 7% (lol) and Kwacha dive against ALL major currencies in excess of 30%?
Try to remember that Kwacha did not go down just last week. It has been three years long steady decline caused by incompetence rated AAA+
Look at Consumer sentiments in CPI though we need to expand the ” basket'” to reflect all sectors Take the National aggregates and reconfirm that inflation rate as an effective annual rate over an average of that “food basket” that is all inclusive reflecting the markets
But the easiest is to see the Interest rate as a factor of those risks and premiums in total and see how 7% fits in that equation on national aggregates reflecting the wealthy and healthy in deficits and surplus that trickles to local sectors reflecting back to reconfirm those national aggregates with speculation and sentiment being some externality and interest rates simply being that factor in those interest rates
and exchange rates simply being that factor in those interest rates
That is why targeting exchange rates as opposed to inflation is effective inflation and exchange rates are pretty windy
Factor in the interest rate calculation and leave the inflation against all risks and see the figure on national aggregates
Its like a capital structure that has to balance up with actual numbers in those rates and risks including firm sentiments
Fear rather than true euphoria in sentiments is what is driving the rates in Zambia much higher than normal particularly exchange rates in Zambia as seen from fundamental analysis