Leader of the Green Party Peter Sinkamba says it is inaccurate to attribute the recent sharp appreciation of the Kwacha to Government’s austerity measures.
Mr Sinkamba said there has been some excitement and celebration within the camp PF triggered by some temporal appreciation of the Kwacha, which traded up to as low as K9.50 per dollar.
He said according to people in the PF, the Kwacha gain was as a result as austerity measures put in place by President Lungu.
“Austerity measures? My foot!” Mr Sinkamba said.
He said in the long term, a strong currency depends on economic fundamentals.
“To have a stronger exchange rate, a country will need a combination of low inflation, productivity growth, economic and political stability. In short, government will need to try supply side policies to increase competitiveness and cut costs of production. This is not the case at the moment. The PF Government has failed on this score,” he said.
“Put simply, the temporal gain of the Kwacha had nothing to do with austerity measures which government has put in place (if any at all). It is simply a seasonality issue. The month of April marks the worst month of the year for the US Dollar. The commodity currencies have typically rallied sharply during April. You may call it “global”, if you like.”
“If it was an issue of policy intervention, why has the rate decayed from K9.50 to K10.50 within hours?”
“Put simply, FX market participants have displayed increasing fragility with respect to US Reserve Bank’s policy shifts. And with several Reserve Bank meetings due at the end of the month – the April 21 ECB meeting, the April 27 FOMC meeting, and the April 28 BOJ, it is entirely possible that April’s seasonality trends will remain distorted.”
Mr Sinkamba said the end of the month concentration of major central banks’ meetings obviously represents a major potential catalyst to send markets off their trends, short-term or long-term alike.
He said the country is likely to see the Kwacha-Dollar rate souring starting the month of May.