Former Zambian Ambassador to Ethiopia and now politician aspiring for the top job in the former ruling Patriotic Front (PF) Emmanuel Mwamba has challenged the statement attributed to republican President Hakainde Hichilema that the Zambia Kwacha has appreciated for the first time in 17 years.
President Hichilema is quoted in an article published on Thursday 27th January 2022; “Zambia’s leader says turning around economy, despite empty coffers” published by Agence France-Presse (AFP) and Rodger Bosch, quoting him saying his new government was on the fast track to restoring Zambia’s credibility and credit-worthiness after inheriting an economy strapped for cash and crippled by debt, and among other things; “Inflation is at 15.1 percent, according to official figures and is now the lowest in nearly two years, and the local kwacha currency has appreciated for the first time in 17 years”.
Posting on his Facebook page, Mr Mwamba said that in response to some market fundamentals, the Kwacha has frequently fluctuated to appreciating or depreciating, noting that, in fact, one of the subsidies to the fuel sector hedges against this factor of frequent exchange rate fluctuations.
Mr. Mwamba said that in early 2021, the Kwacha depreciation went to an all-time low and traded close to K23.00 per US dollar, and in May 2021, there was a sudden and rapid appreciation of the Kwacha, which resulted into an intense debate on what economic fundamentals could have changed to warrant such sudden appreciation.
Mr. Mwamba said that, in the May 2021 Monetary Policy Committee (MPC) Statement, Bank of Zambia explained the appreciation of the Kwacha, thus: “In addition, the significant improvement in copper prices and renewed interest in domestic Government securities by non-resident investors are supportive of the foreign exchange market and in turn
lower inflation going forward.”
“The strong recovery in copper prices to the current level of US$9,521 per metric tonne from a low of US$4,745 in March 2020 has contributed to sustained strong export earnings. This has resulted in improved foreign exchange flows from the mining sector through tax receipts remitted directly to the Bank of Zambia in US dollars.”
Mr. Mwamba said that the local currency has since May 2021 been bullish and has traded as low as K15.50 just before August 2021 and said that that to hear the President repeatedly state that this is the first time the Kwacha has appreciated in 17 years despite the open facts, is clearly concerning.
Mr. Mwamba concluded by saying that the Kwacha has continued to depreciate since the President was elected into office and now stands at around K18.