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Monday, November 8, 2021

Chibamba explains Kwacha depreciation

Headlines Chibamba explains Kwacha depreciation

Economist Chibamba Kanyama has attributed the sharp depreciation of the Kwacha to the importation of crude oil.

The Kwacha has cont9nued to lose value against key convertibles trading at K20 to 1 US dollar as at Monday, September 7th 2020.

Mr Kanyama said the pressure on Kwacha could be due to the restocking of Indeni with crude oil which is going on at the moment.

He further attributed the depreciation of the local currency to the importation of agriculture inputs ahead of the agricultural season.

Mr. Kanyama also observed that the Kwacha’s rapid depreciation could be that investors are waiting for policy direction following events at the Bank of Zambia.

Meanwhile, Reuters reports that Zambia has kicked off the process of registering its Eurobond creditors, bringing the country another step closer to tackling its hefty debt burden.

One of the world’s largest copper producers, Zambia owes money to four main types of the creditor.

It has $3 billion of Eurobonds outstanding and owes $2 billion to commercial banks, $2 billion to the International Monetary Fund and World Bank and another $3 billion to China.

Zambia’s Finance Ministry said in an authorization letter that its financial adviser Lazard had appointed Morrow Sodali to gather information on the holders of its three outstanding Eurobonds and “facilitate communications”.

In May, Zambia’s government-appointed debt specialists Lazard to advise on how to overhauls its foreign-currency debt.

Meanwhile, its three outstanding dollar-denominated bonds have recorded sharp gains in recent days. 2022, 2024, and 2027 issues ZM082877959=, ZM105638671=, ZM126708157= all traded around 55 cents in the dollar, having gained around 3 cents since the start of the month and up from levels below 30 cents in late March and early April, during the height of the coronavirus crisis.

“Sub-Saharan bonds in general have recovered on massive G7 central bank liquidity injections, the pick-up in commodity prices, a stronger performance than many so-called ‘developed country’ peers in dealing with Covid-19, and solid emergency macro policies in countries such as Angola and Ghana,” said Simon Quijano-Evans, chief economist at Gemcorp Capital LLP.

Furthermore, the bonds had benefited from peers across the region making progress in debt forbearance talks with China and the Paris Club of creditor nations. Paris Club creditors agreed in late August to give Angola debt service relief until the end of 2020.

In June, 10 of Zambia’s international bondholders said they had formed a creditor group to facilitate debt talks with the government.
“Looking ahead, all eyes will now be on what plans Zambia may have with regard to liability management, coupled with a much-needed IMF loan program,” said Quijano-Evans.

43 COMMENTS

  1. Why is Chibamba using “could be” instead of telling us what he knows. You can not be guessing on such important matters. It is good to keep quiet until facts are known

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    • Kalombwana Economics isn’t a precise Science so you will rarely find an economist who tells you that this is what has caused that. Could be is the right way of putting explanations across in any Social Science unless the speaker wants to be arrogant.

  2. It’s seems the guy does not even know the reason. All what he has said happens as daily business and can not depress a currency to that extent. How does a small oil importation of US$30m depress a currency. Ba Chibamba a country is not a tuck shop

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  3. CHIBAMBA SOUNDS LIKE SOME TV FOOTBALL PUNDITS WHO JUST YAP FOR THE SAKE OF LOOKING INTELLIGENT.
    ZAMBIA SHOULD CHANGE ITS ECONOMIC MODEL. TOO MANY SHOPPING MALLS CLAMOURING FOR FOREX. REDUCE BORROWING DRASTICALLY. ASK FOR A REPRIEVE FROM CHINA AND FORCE MINES TO RETAIN LARGE CHUNKS OF THEIR EARNINGS IN BANK OF ZAMBIA TO SUPPORT KWACHA NOW AND KWACHA WILL APPRECIATE IMMEDIATELY.
    BANK OF ZAMBIA GOVERNOR WAS INCOMPETENT TOGETHER WITH THE CURRENT MINISTER OF FINANCE WHO ARE JUST SPECTATORS IN THE WHOLE SAGA.

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  4. CHIBAMBA SOUNDS LIKE SOME TV FOOTBALL PUNDITS WHO JUST YAP FOR THE SAKE OF LOOKING INTELLIGENT!
    ZAMBIA SHOULD CHANGE I! S ECONOMIC MODEL. TOO MANY SHOPPING MALLS CLAMOURING FOR FOREX. REDUCE BORROWING DRASTICALLY. ASK FOR A REPRIEVE FROM CHINA AND FORCE MINES TO RETAIN LARGE CHUNKS OF THEIR EARNINGS IN BANK OF ZAMBIA TO SUPPORT KWACHA NOW AND KWACHA WILL APPRECIATE IMMEDIATELY.
    BANK OF ZAMBIA GOVERNOR WAS INCOMPETENT TOGETHER WITH THE CURRENT MINISTER OF FINANCE WHO ARE JUST SPECTATORS IN THE WHOLE SAGA.

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  5. Laughable, what’s this chap talking about? Can a mere procurement cause the devaluation of any currency? No further comments

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  6. This so called economist has no clue what his talking about. If he was that good, he could have used his knowledge to enrich himself and lead from the front.

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  7. Zambia’s slide into economic despondency goes much deeper than this wannabe economist Kabamba Chinyama would ever be able to comprehend. estocking of crude oil at Indeni or imports of agricultural imports alone would not cause such a steep slide in the value of the local currency against the dollar. The main culprit is graft which Kabamba Chinyama is either ignorant of or scared to pinpoint because he is looking for a job from Lungu Jameson. The price of oil in Zambia is nearly double that of other countries with most of the fat looted by the PF. This is what creates inflationery exuberance in the economy, the serious leaks lost to graft followed by less and less dollars earned from dwindling exports elsewhere are sought for more imports, the local currency starts tanking against the…

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  8. Mudala Chibamba sometimes keep quiet.You’re just guessing and u can fail an exam.We don’t need such economist in Zambia nowonder the economy is doing bad bcz of such fake economists. Habazoka is a good economist coz he is practical.You can’t compare him to these theorists we have in Zambia.What they know is copy and paste.Whatever IMF n world bank say it’s yes.Learn from China,Japane and Russia.We are brained washed by these whites from west.We need to start thinking on our own.I hope Habazoka can teach these theorists we have in Zambia. Zambia economy can improve if these chaps can stop copy and paste.Maybe it’s high time Zambia put economist who graduated from Russia ,China and Singapore to mange bank of Zambia.

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  9. Mudala Chibamba sometimes keep quiet.You’re just guessing and u can fail an exam.We don’t need such economists in Zambia nowonder the economy is doing bad bcz of such fake economists. Habazoka is a good economist coz he is practical.You can’t compare him to these theorists we have in Zambia.What they know is copy and paste.Whatever IM .F n world bank say it’s yes.Learn from China,Japane and Russia.We are brained washed by these whites from west.We need to start thinking on our own.I hope Habazoka can teach these theorists we have in Zambia. Zambia economy can improve if these chaps can stop copy and paste.Maybe it’s high time Zambia put economist who graduated from Russia ,China and Singapore to mange bank of Zambia…

  10. This is just a minor reaction. The kwacha will bounce back like it always does. Nothing sinister. We know those celebrating and wishing it gets worse are majority diasporans and the privatisation crook who hid his money abroad. However we Patriots will ensure things are normalised. Remember we are in a global recession and pandemic. Let us be realistic

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  11. Chibamba, when you disparaged the PF GRZ, these diasporan donkeys on this blog praised you to high heaven. You speak the truth today and they are insulting you. This is the frightening reality of Zambian politics today, everything bad is PF, only upnd and its supporters are good. This is facism upnd style and to let these people near power will destroy this country.

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  12. An economic analyst and renowned journalist cant use terms like “could be” Maybe Dr.Lubinda Habazooka had a point when he said CK was not an economist?There are alot of obvious factors leading to the depreciation of the Kwacha most of which are financial and economic mismanagement coupled with corruption.

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  13. Our economists in Zambia are just as hopeless as our politicians. The country has been brought to its knees politically and economically. Those invited to go and listen to the speech in parliament on Friday, good luck, but if you have a back yard garden, watering your tomatoes would be more productive than heading to that place

    • But all our professionals have become useless in the past 20 years. That is why the University of Zambia’s degrees have been downgraded. Engineers are substandard, they cant construct a bridge,, Lawyers are unprofessional, they steal from clients, Doctors cant diagnose citizens, Ask Dr Chitalu why he has switched to stealing instead of providing health services, Journalists cant write just read the stories from any Zambian website, Teachers teach the wrong things because they don’t know the right things. This is what happens when you don’t invest in Education.

  14. Commplete total lie, they’re using you now. What a shame.
    Biggest problem is corruption and thiefty by foreign companies
    over non payment of taxes including govt officials.

  15. Telling people what they already know is a waste of time. Telling them what they do not need to know, is showing off. Real teaching is telling people what they NEED to know.
    What do we NEED to know about the Zambian economy so that we can do something about it? That is the most important question.

  16. Telling people what they already know is a waste of time. Telling them what they do not need to know, is showing off. Real teaching is telling people what they NEED to know.
    What do we NEED to know about the Zambian economy so that we can do something about it? That is the most important question. xyz

  17. Hmmm ba Economist, you can explain better!!! Anyway, the Kwacha will definitely bounce back in due time, we just don’t know when. To those that can benefit from the exchange rate, now is the time. God help us all!!

  18. COVID 19 has had a negative effect on our economy. We wonder why people are not attributing the imbalance in most of our economic indicators to COVID 19 pandemic. In a poor country like Zambia, we cannot withstand the economic shocks arising from COVID 19 pandemic .Our imports have been affected and most businesses are down. Where do we expect to get money to reduce some of these shocks in our economy? We look for wrong reasons for the poor performance of our economy even when we know the clear forces at play. Let us work together and improve the situation.

  19. $1 to kw20 is about right …..

    Things will get a lot worse when global oil prices go up……they were selling at giveaway pricers for about 3 months ……did GRZ reduce the fuel price at gas stations accordingly. ?

  20. Zambia imports fuel every year. So this cant be a determining factor
    We have not seen this level of depreciation since the Chiluba days.
    The fact is that the PF have began to print money.

  21. Waitaya CK!
    Nkani azibika!
    A bad Carpenter is always blaming his tools!
    Solution is to fire the bad Carpenter and employ a competent one; at least someone who understands the difference between Fiscal Policy and Monetary Policy, not aba tukwete ba NK (No knowledge) or ba”didn’t!” …

  22. We know economics is common sense but some guess work is very suspect. Mark my words ,December 1d to K30, August 2021 1d to K50…..

  23. Mr Chibamba Kanyama doesn’t even have a degree in economics but busy trying to explain stuff beyond his understanding.

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  24. My Lord Kaizar Zulu, you are correct to a certain degree with your comment regarding global recession. The only country that’s not in recession is China unless you beg to differ?

  25. Currency depreciation can occur due to factors such as economic fundamentals, interest rate differentials,maka maka political instability or risk aversion among investors.
    Countries like Zambia with weak economic fundamentals such as chronic current account deficits and high rates of inflation generally have depreciating currencies. Currency depreciation, if orderly and gradual, improves a nation’s export competitiveness and may improve its trade deficit over time.

  26. Kaizar Zulu, you are right to say those in diaspora are celebrating and wishing it gets worse. I am one of those in the diaspora, and I have even managed to get a part time job which pays weekly and all my pay goes to my account in Zambia whille the Kwacha is still in unconscious state. It’s time to cerebrate, it’s harvesting time. At the time of writing one pound (£1) was fetching K26.50. So the worse the Kwacha gets the better for diasporans including Kaizar who is in UK.

  27. The reasons advanced by Kabamba cannot make the Kwacha sink so low against the currency basket. Zambia has been importing crude oil and agricultural implements for a long time, what has changed now?

  28. KIKIKIKIKIKIKI… Thats the problem when an atmosphere of POVERTY and FEAR has been created in a country…Even Born Gain “ECONOMISTS” can write LIES just to be seen to be POLITICALLY CORRECT ……. >>>> Kwacha remained a toddler since it was born in 1964 through Unip and through MMD but immediately the PF took over it began to grow. Became a teenager at 11 during Satas time and then old enough to drink and drive during lungus time when it turned 18. Now very soon before independence it will become a fully grown adult at 21. If PF continue next year we might even see the kwacha attain middle age BY 2026. By the time EDITH takes over in 2026 it will be KATWISHI…..

  29. Its because all the corrupt rich people have been converting their kwacha into $ as they have no confidence in the country. Too much corruption simply from top to bottom. Stop this corruption to improve our country!!!

  30. Thanks for explaining the ‘demand’ side, what about the ‘supply’ side? Why is there a short supply of the dollar? Low productivity? To much political interference in markets making investors nervous? Remember CEC, Glencore, Denny Kalyalya?+ covid? Political bickering?Yes…

    • A Banda we have foreign reserves. We are being advised not to use them by some World Bank economists and our Minister of Finance is agreeing

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