The dollar has hit a twelve year high against the euro, and it’s not going to stop anytime soon. Not when the dollar is in the middle of its biggest rally in almost 40 years.
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.
Yup. Tell that to the UPND on here who think it’s president Lungus fault.
Understanding the old African tradition, “it take a whole village to raise a child” is key in winning public confidence by proving oneself as a constructive citizen amazingly missing in the opposition politics. Economic transformation is a process of time. Indisputably like most Countries, we have a monolithic economy with weak economic fundamentals such as concessional current account deficits though with low rates of inflation. Fortunately, our Currency depreciation has been orderly and gradual which key in arresting the situation. It should improve a nation’s export competitiveness and improve our trade deficit over time. None is pulling portfolio investments out of the country that could have mounted risky downward pressure on our Kwacha. Dr. Kalyalya is a perfect fit at BOZ.
Key statement “U.S. economy is doing well enough that the Federal Reserve is getting ready to raise rates.” It comes down to policy, so yes it’s govt’s fault. All countries are affected, but impact varies. So let’s not ignore the fact that our countries economy hasn’t been it’s best, even during Sata’s term
Zambians always look for someone to blame, they have no interest in solving problems. The ignorance of blaming EL for the rise of the dollar is hilarious!
The question we all need to be asking ourselves is how has the Kwacha been performing from the time Zambia gained independence and what steps need to be put in place to have it’s performance return to it’s strongest in Zambia’s history, that should be the benchmark that should be used. Explaining and keeping our arms folded and watching the market forces dictate the direction of our currency without putting any measures to mitigate the impacts is not being proactive. We may compare our currency with other currencies however those strong currencies have had measures to maintain their strength and will definitely bounce back based upon whatever measures they are putting in place.
@1.4 at one time KK was determining the price. This was after the kwacha started sliding due to depressed copper prices. Previously the was exchanged at 60ngwee to $
The Americans are on this planet so are the Zambians. The difference is that Americans aspire and work towards remaining the leading global economy and the Zambians do not even think of it. Zambians are happy to be third rate and pat each other on the back with glee and say we are not alone in the trash. Zambians blame somebody else for their woes other than themselves. Zambians pull each other down on brilliant ideas that are in national interest because the idea is coming from the person whose is on the wrong side of their politics. That is my Zambia!
In the Post the depreciation of the Kwacha was attributed to Lungu’s alleged failing health whilst Nawakwi said that the weakening of the Kwacha showed a lack of confidence in Lungu’s leadership by investors…….are they dull or just pretending to be dull?One wonders why some people would stoop so low all in the name of gaining political mileage.
I was surprised that Multichoice Zambia used this as one of the reasons why the charge for DStv in Zambia is higher than in SA when the Rand has equally depreciated. If they refuse to corporate with the govnt on this issue then govnt should also stop arresting people who are watching DStv free of charge on decorders bought from China cause they are also stealing from Zambians.
and hh is supposed to be an economist. hehehehehehe
Well, fair enough, all major currencies are under pressure because of the strength of the Dollar. However, please tell me what policies has this sitting president put in place to address the issue? Zero!
Can you honestly compare the economies of all the above listed countries to that of Zambia? I dont think so. The conclusion to this is; Mr Lungu is killing the Kwacha. No one has confidence in the Zambian economy. The Kwacha’s purchasing power is very weak, hence the high cost of living.
Poor leadership styles always looks for excuses instead of solutions. PF is does not possess any measures and strategies to mitigate the fall of the Zambian currency but all they look for is justification. The fact still stand that ever since PF took over there has been no stability with our economy hence the gradual fall of Kwacha. We are not concerned about the slightly gain coz that should be a slight gain of the dollar but the rate at which the kwacha is depreciating leaves much to be desired.
Iwe Llyods bank
Why is it that Malawian Kwacha is gaining against the US Dollar while the Zambian Kwacha is falling dismally?
Which country has more land and resources between Malawi and Zambia? Which country has more people between Malawi and Zambia?
Zambia has more land and resources than Malawi . Zambia has a smaller population than Malawi.
The real difference in the two countries is that Malawi has prudent economic managers at the top, while Zambia has thieves and incompetent economic managers at the top of government.
There you have it folks. I hope this explains why the Kwacha and the dollar is falling dismally.
I personally can not see any other concrete reason apart from PF ‘s poor management skills.
You are really a retard! A President is elected to deal with national problems. Can you mention any other currency that is sinking a the rate the Kwacha is.
lungu can’t but we can not justfy wen we have all it takes to value our money.in levy’s time we were not exporting but he managed but in lungu’s time all is at hand but we are failing to add value to our kwacha.
@TRUTH, so this whole article has made no sense to you, right? Read it again and you will understand that the forces at play currently may NOT be the same forces which influenced exchange rates during Mwanawasa’s time. Not even as late as Sata’s govt last year.
Quote: “The dollar has hit a twelve year high against the euro, and it’s not going to stop anytime soon. Not when the dollar is in the middle of its biggest rally in almost 40 years.
But it’s not just the euro that the dollar is rising against. It’s pretty much every currency in the world.”
AND THIS TWO PARAGRAPHS IN THE ARTICLE MEAN NOTHING TO YOU?
It is like saying in 1972 we used to buy a loaf of bread at 5 ngwee, so why can’t we do the safe today. Bwana, different times, different economic forces at play!
Hope our dull HH and his minions will get it.
@ robin
“…our dull HH and his minions will get it…”
Forget about him and his minions.
It is current Government which needs to “get it” and illiterate like you to understand importance of monetary policy.
A good man is never honored in his own land. About HH this what others are saying
“According to London News Print Newspapers, the opposition leader is regarded as the best visionary Economist who is among the 10 best Economists the whole Africa.
On the 31 March 2015, HH will address hundred of economists at royal society of Medicine I wimple street and will travel to the United states where he will meet with United States of America President Barrack Obama to discuss various issues that are affecting Africa and Zambia at large.
HH has gained Investors trust and Investors have showed confidence that Mr. Hichilema President of the Opposition Political party United party for National Development UPND can deliver and work accordingly in any country.” zambianwatch
@CHICHI being in business as your leader is does not mean he can perform better than the current president..we are all going to that small meeting in the US ,but dont lie the american president has no scheduled meeting with your HH,lets desist from building castles in the air while promoting unpopular ever losing presidental candidate.
Coming back to the kwacha, the article above is very clear,but that doesnt mean that the technocrates are sleeping ,they are still working out modalities that will mitigate the impact of the devaluation our local currency.Remain focused,& i wish the PF well there in Zambia…
Chinyama, it people like you who`ve with iron age mindset who`ve contributed to making Zambia what it is——-sinking nation!
HH is simply the best. That is why my relatives in Yambezhi love him!
justify again fuel but lsk times are dull and have proven to be prolungu but wen we had sata at the helm lsk times behaved like franky bwalya criticising sata day in day out but today they turn a blind eye to lungu as if they don’t live in Zambia.lsk time why did u hate sata but love lungu may be ni wako ni wako sydrome
@TRUTH, how the simple fact that maybe LUNGU IS DOING MOST THE THINGS BETTER THAN SATA DID? Can’t the reason be just that simple than the “wako ni wako” cr$p you are referring to? And why should LT criticize the president if there is no reason to? Or are you mistaking LT for ZWD? They ain’t the same bululu!
Robin ukawaa! if others can manage there currencies why not your country?? Why do you support stupid reasoning imbwa
Shut up UPND……its not Lungu’s fault.Even if HH won the election?God forbid?we’ll still be in the same scenario.Do not be cheated.
How about the copper price,……LMAO.
imwe bantu y always complaining? Lungu this , lungu that!
even the Malawian Kwacha has lost value against mighty USA dollars.
@ john
Who cares about Malawian Kwacha or Egyptian Pound.
Topic is Zambian Kwacha weakness not just against USD but also other currencies.
@Aleshaday, are you sure about that? Your compatriot @Wanzelu might not agree with you. Not too long ago he was busy praising how well the Malawian Kwacha was doing against the US $, while poo pooling the Zambian Kwacha. And a multitude of the “usual suspects” on here agreed with him. And now no one cares about MK, really!?
How days can few like eternity in the world of financial markets. That’s why it is always wise and a sign of intellectual maturity to argue these matters in terms of “TRENDS” seen over a reasonable period of time. Weeping up unwarranted economical hysteria based on half-backed set of assumptions, like most of the self-appointed “WANNABE ECONOMISTS” in Zambia are always fond of doing, can only hurt citizens who are already vulnerable economically!
How long will it take Zambians to be factual and face realities. I believe there is much to be done in that poor country. No wonder they have broken the record of having two sitting presidents dying whilst in office as a result of sickness.
@John
Stop lying to your fellow PF minions. I am monitoring both the Zambian and Malawian Kwachas. The truth is ,the Malawian Kwacha is gaining against the Dollar while the Zambian Kwacha is falling.
Just two weeks ago, Malawian Kwacha was K655 to a £1 and now its around K628 to £1. Please check rates and verify . Do not comment from an ignorant point of view. I have used a £ here because its the strongest currency the world over.
Ignorance is bliss. PF is taking advantage of the ignorant Zambians out there.
All your corruptly obtained millions are growing smaller each day that passes.
Most Zambians are extremely dull.By what % has the zmk lost and check the other currencies.Why is zmk then still losing against other major currencies that have lost against usd.Zambians stop being myopic and dull like chickens
I already posted something to the points raised in this article. I’m glad we are aligned now and we can stop blaming PF/EL on this but only their contribution to the problem which is not much in this instance.
They have and continue making blunders that we have to hold them accountable on but this one is really pissing in the air.
start using the USDOLLAR like in zimbabwe….why cant you guys understand?
we dont then need to worry daily about how to price the goods and services.currently it is cumbersome.you sell an item and 5 mins later your profit is eroded due to the depreciation of the Kwacha…..
From John Mwanakatwe’s END OF KAUNDA ERA –ECONOMIC PROBLEMS
….efforts were made to diversify from dependence on copper. This proved difficult because of the poor copper prices obtaining in 1971 as compared to the period 1965 – 1970. This problem was compounded by Zambia being land locked.
This problem has continued to dog us up to now. Urbanization has put a lot of pressure on our meagre resources. No amount of politicking will solve this problem unless we all become practical and objective.
Recent strength of the USD is a result of sound monetary policy resulting in availability of investment capital to prop-up crisis affected industries.
In comparison, we have single commodity economy, no sound monetary policy, irrational infrastructure development financed by external borrowings at rates exceeding 8%, bloated and inefficient executive financed by internal borrowing and banking lending rates starting at 22.5%.
One question, is it periodical strength of USD only reason for pathetic state of the Zambian economy?
@Aleshaday: Thank God we have people like you who can make proper analyses. Honestly speaking, I dont care how strong the USD is doing. What I care about is how Zambia is doing and what our leaders are doing to improve the economy. So far, the leaders are doing nothing much to improve the kwacha’s value.
@12.1 The President has instructed BOZ to do something about and the Governor will soon inform us.
Zambians,please stop blaming our president E.lungu!The world economy is controlled by USA and Zambia can’t do anything.British pound and dollar are major currencies in the world.All investment is in dollar and u can’t save money offshore unless it’s in dollar or pound.The only solution is to have a global currency otherwise USA and Britain will control the economy of the world.Maybe they have just withdrawn 30% of dollars in circulation hence the demand of dollar everywhere.In Russia it’s worse .$1=60R
the currency has depreciated close to 115%.Don’t even blame Chikwanda,the man has performed well with this current crisis in the world
I like the FEDS and Seriousness in aligning
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 Zambians
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…
Also remember that since Obama took over in 2008 the US economy was in slumber. It has taken many year and various stimuli for it to jump to these heights. People should stop cheap politicking and offer solutions if they actually have any. Saying these and that have no confidence in Lungu is not true, There are full dictatorships in the world whose economies are doing fine. Let Nawakwi explain something else.
US Total Credit Market Assets Held by Domestic Financial Sectors Q4 2014 42.15T USD 1.46%
?
The depth of assets in the US Financial sector ,efficiency in trades and settlement crystallising and removing speculations moving assets with minimal costs confirming and insulating the exchange rates in the dollar as they stand to defend the gains of the dollar and us economy on the world stage
The current Greek PM promised the electorate that he would turn the economy around once elected to office. Indeed he was elected and found that there was a big difference between fiction and reality. He thought he was simply going to turn the nob and everything was going come out sparkler. Alas he is now facing the music.
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%
CNY/USD+0.04712%
@Ndaje Kahks: You sound very innocent in your reaction. Thats brilliant. Unfortunately, we cant tell Mr Lungu on how to run the country. He is the President and he has advisers. All we are interested in is to see results.
Fortunately, we have other experienced people that have been trying to advise him. For instance, a few days ago, Nawakwi tried:
“….We said 1. Re-organise Ministry of Finance from top to bottom. 2. Give up Ministry of Defence to someone who can manage it. It is not true that out of 14 million Zambians, there is not a single soul alive that can manage Ministry of Defense. That is why we have an army commander…… 3. Split Ministry of Mines from Ministry of Energy so that each of those portfolios concentrate on their core business…
very SOUND but I will disagree on the portfolio of defence. The President has a prerogative on this. He may have reasons for this. Nawakwi has not given advice that can improve the Kwacha. All she is been doing is waffling in political vomit. Splitting some ministries have received mixed feelings 50-50. Others are against due to the fact that this will increase the number of ministers. They argue that besides each function has its own deputy minister and permanent secretary. Lungu has only been in office for less than 3 months and expecting him to answer to millions of suggestions bombarding would be equating to an omnipresent god.
At time kwacha was at par with the british pound.Whats went wrong?
Has the Govt taken any stance on addressing corruption?this is one effect which any responsible govt must address..Recall Levy had impacted on a crusade called Zero tolerance against corruption as a result there was investor confidence.The ZMW traded at K3000 to 1$.Now days we see our leaders moving shoulder to shoulder with those who are not yet cleared on there corrupt charges are we being serious.look at how the brazillians did recently can that be done by zedian people?
soon will be just hear it’s now K8.20 to 1$
From John Mwanakatwe’s END OF KAUNDA ERA –ECONOMIC PROBLEMS
….efforts were made to diversify from dependence on copper. This proved difficult because of the poor copper prices obtaining in 1971 as compared to the period 1965 – 1970. This problem was compounded by Zambia being land locked.
This problem has continued to dog us up to now. Urbanization has put a lot of pressure on our meagre resources. No amount of politicking will solve this problem unless we all become practical and objective
READ THIS BOOK (PAGE 113FF) AND YOU WILL SEE WHERE WE ARE COMING FROM.
Too much hate speech. I think, those post such stuff do not imagine these things can lead to war.
Know the truth and the truth will set you free. M’membe, Nawakwi, HH and Luonde must go back to school and do basic economics, their criticism is not only unwarranted for educated Zambians but out-rightly intellectual gibberish !!
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
lets remove much fear amongst the players and the rate will trickle positively
@charles-Baba-what is it that you have learned or achieved to issue such a. sweeping blog? Zambia is in a mess in all aspects of human development under PF.Its not just about the devaluation of the Kwacha-this is just the signals of an economically failed economy! Wake up baba & revisit your Chikwandarian Economics! PF technocrats are really in oblivion,let alone its supporters! All economic fundamentals are signalling negatively & as usual,PF air heads is business as usual-this scenario is really shocking under PF-The poor will really feel it under PF!