But it’s not just the euro that the dollar is rising against. It’s pretty much every currency in the world.
According to the Washington Post report monitored ZANIS in Lusaka today, this because the U.S. economy is doing well enough that the Federal Reserve is getting ready to raise rates, and the rest of the world is slowing down enough that it’s cutting them.
The not-so-short list of countries that have eased monetary policy the past few months includes Australia, Canada, Chile, China, Denmark, Egypt, India, Indonesia, Israel, Peru, Poland, Russia, Singapore, South Korea, Sweden, Switzerland, Thailand, Turkey, and, above all, the Eurozone now that it’s buying bonds with newly-printed money—aka quantitative easing—which Japan has also been, and still is, doing itself.
The result is that investors can get better returns in the U.S. than they can in a lot of other places including Zambia.
“ Would you rather buy a U.S. 10-year bond that pays 2.05 percent or a German one that pays 0.28 percent?
“” So that’s where they’re moving their money, and, in the process, pushing up the value of the dollar.
According the Washington Post, the dollar is exploding up more than it’s getting pushed up.
The publication quotes Citibank’s staffer Steve Englander as having pointed out that , the dollar, going by its trade-weighted exchange rate, has increased more in percent terms the past 175 trading days than it has in any other similar period going back to 1976. And that will only continue if the Fed really does raise rates in June.
The local currency the Kwacha has fallen by almost ten per cent against the dollar since January, following a 13 per cent depreciation in 2014.
It has depreciated by over 25 per cent in the last 12 months to trade at its lowest since May 2014, now reaching around K 7.8019 and K 7.6582 to the Central Bank’s rate on Friday.