The Bank of Zambia called an emergency meeting with lenders to probe a drop in the nation’s currency to a record against the dollar, two weeks after Ghana limited foreign-currency sales to halt a slide in the cedi.
“The central bank just called a treasurers’ meeting to try to understand the dynamics” affecting the kwacha, Mwewa Kyamulanda, a currency trader with Investrust Bank Plc, said by mobile phone from Lusaka, the capital.
The currency of Africa’s biggest copper producer slid as much as 1 percent to 5.78 per dollar, its lowest level since Bloomberg began compiling records in 1994. It was trading 0.6 percent weaker at 5.76 as of 6:03 p.m. Tuesday. The kwacha has declined 3.2 percent this month, the continent’s worst performer after the Gambian dalasi. Yields on Zambia’s $750 million of Eurobonds rose four basis points, or 0.04 percentage point, to 8.24 percent, matching a record high.
A falling currency increases the risk of higher inflation in Zambia, which imports items from oil to breakfast cereal. It also makes repayments on external borrowings more expensive. Ghana’s central bank announced limits on dollar use as well as withdrawals and transfers on Feb. 5 in a bid to halt a decline in the cedi, Africa’s worst performing currency this year. Emmanuel Pamu, financial markets director at the Bank of Zambia, declined to comment when contacted by phone before the meeting and three subsequent calls to his mobile were unanswered.
Kwacha Correction
“There seems to be a view that the kwacha has been overvalued quite a bit and this is a correction,” Kyamulanda said. The meeting was with heads of treasuries and Investrust was among those invited to the meeting, which happen “from time to time,” according to Kyamulanda, who said he wasn’t allowed to attend on behalf of his manager and declined further comment.
“Zambians use the value of the kwacha as a direct barometer of how well the country/economy is faring,” Chris Becker, a market strategist at ETM Analytics in Johannesburg, said in an e-mailed note yesterday.
Countries including Zambia and Nigeria may follow Ghana’s clampdown on foreign-exchange trading, which may cause investors to withdraw dollars, curbing supply of the greenback, Becker said in a separate note before today’s meeting. Zambia banned the use of dollars in domestic transactions in 2012.
Nigeria has enough reserves to keep defending the naira, Central Bank of Nigeria Deputy Governor Sarah Alade said Feb. 14. The cedi has weakened 6.9 percent this year and the naira 2.3 percent.
“The risk is that these governments and central banks respond with their own soft currency and capital controls to prevent an outflow,” Becker said. For the kwacha, “further downside is on the cards, and interest rate risks are tilted strongly to the upside,” he said.
Source:Bloomberg Businessweek
that’s how the 1980s started when KK messed things up! the result was 1991!
This is great news for people living in the UK here and investing in zambia
Of Course as a country you are suffering but I am smiling because things are cheaper
As a PhD student i can confirm this is only bad news for people living in zambia and people exporting, for people like me and Nick why is this bad news?
Thanks
Zambia is not the whole world, and such serious lack of exposure is what will drive the country down. Now, you doomsayers what can you say about the loses in currency values being experienced in Canada, South Africa, Botswana, Namibia, Ghana, Nigeria, etc?
You will always remain a dimwit if you don’t read and understand the financial world you live in!
The whole economy is beyond the understanding of the gang of thieves masquerading as a government.
In 2016 Ukwa and his gang of monkeys needs to be held responsible
There is nothing wrong with kwacha being badly affected naimwe ba central bank from my studies. And I am smarter than anyone here
I am not sure the Kwacha was ever been less than K3,200 to a USD for as i remember it has been around late K3,500,000 plus although there is a myth in zambia that once the pound and kwacha were 1:1 what a joke
I hate such myths
Also for those who might want to know,and i love educated people , pre 1964 there used to be pounds in zambia, on eBay the other day Nick showed me a link of a £5 ‘Bank Of Zambia’
Is that real?
Thanks
The dolar gaining power is just every where around the world, so don’t blame the Zambian gavernment. I live in Auzie and the other day i went to buy USA dolar $2000 and i had to pay Australia dolar about $2350. Just few months back i could have gained more USA dolar cause Australia dolar was more stronger than USA. Thanks
Rebase it to US Dolar 🙂
*Mushota,
A PhD student who doesn’t know what a noun, comma and capital letters!
However, the £ you’re referring to was from Barotseland. In Barotseland before 1964, we used our own currency known as Mupu with a pound emblem and Ndo for coins.
Therefore, it was that time our Barotse currency was 1:1 with the British Pound. I still have some of those Barotse Pounds or simply Mupu.
As you’re now aware, in 1964, Northern Rhodesia and Barotseland entered into a treaty BA 64, hence the Kwacha. Mwanawasa, (MHSRIP), with his team worked hard and before his demise, the Kwacha reached as low as K2,500 against the $. RB +team also tried at least a $ was K3,500.
As with PF, 2years in power, a $ is now at K5,700 un rebased.
“The kwacha has declined 3.2 percent this month, the continent’s worst performer after the Gambian dalasi”….. Very soon it will be the continent’s worst performer.
This is what happens when you have people who have no basic understanding of economics running the country.
I miss the MMD times, during Mwanawasa’s time, we used to buy a dollar for K3,200.
I once bought $ at 2,450 during Dr Mwanawasa time.Elders told us not to vote for these guys but we didn’t listen, these are the results.
Obviously when you try and emulate UNIP policies, UNIP results will automatically come back. Cement prices went up recently in case people did not know.
Insanity is doing the same thing over and expect a different result!
Exporters will benefit with the decline of Kwacha. Zambians shall tighten their belts and reduce imports.
Kwacha shall touch 6.2 before the end of 2014.
this is the same thing that has been happening in south Africa and it is all related to the mining companies-the wage demands from the mining employees means that the mining companies who budget salaries in dollars will manipulate the exchange rate so that despite offering increments to workers they will still be paying the same amounts in dollars
We have professors and people with PhDs, in all Engineering fields and we have minerals coupled with good weather( devoid of extreme whether like floods, ice and high temperatures) but we import tooth picks, cereals, and other simple things. How then do you expect the kwacha to be strong merely because of the so called investor confidence?
Chimbwis no plan, no clue indeed, that’s Sata’s gorvenment
It has sank miserably it cuts through to the cole! Am wondering why, infact am not speaking from without I actually felt it, what is going on people?!
At times somebody’s death can bring solutions to the tsunami which is about to hit a particular country or home. In this case, I am referring to ALL THE OLD MEN in this PF administration especially SATAN THE BEAST and his UNCLE KIKWANDA. Everybody should understand that these OLD MEN are clueless about salvaging our declining economy. STOP DREAMING what is happening is real, and we are in trouble.
To make financial gains? 1. Reduce the size of GRZ Ministers to 12 at most , 2. Appoint a credible DG Ops at BOZ , 3. Put ABC on the Bench bring a modern Economist at Treasury 4. Re-discuss the mining Sector and bring back windfall tax 5. Introduce an Educational Levy to curb mushrooming ‘universities’ 6. Widen the tax base levy the informal sector, 7. Increase ground rates and collect 8. Open up manufacturing and not consumption 9. Need I say more?
But who has the brains to understand these simple economic visions in pf lead gov’t.how I wish they can change course,things are not promising in Zambia.
spot on except they may start looking for you to go in jail for having these brilliant ideas.
@martin. Thank you for your suggestions. I however do not accept that levying private universities when we should be encouraging them to up their game and attract neighbouring students is the way to go. Let us improve our education so that we become like Australia, Canada, India and UK where we send our kids. Ground rates and rent are already too high; try owning 70 properties and you will feel like crying.
My addition is that we should reduce taxes to induce consumption which will in turn spar production and increase employment. Private enterprise detests high taxes. Start by reducing VAT to 11% and PAYE to 25% top slice above K20 000 emoluments per month. The freed tax will be invested by individuals to create wealth.
Also abolish subsistence allowance for GRZ officials.
Matin and kulutu. This is what I expect from people who have seen the inside of a classroom although your solutions may not be entirely correct. About Universities I think kulutu is correct. Part of the reasons the kwacha is under pressure is that most parents send their children abroad for school because of limited places at our universities coupled with poor standards and a lot other problems.
Do you think a country that depends on imports would have a strong currency? Further , you give tax holidays to investors…..change the policy .
Peace and prosperity to Mother Zambia.
Umubiyo Matrix na Luapula Premier mulikwi?? @Matrix, look at the reality and not the propaganda you have been spewing that the fall of the Kwacha doesnt have a material impact…..ki ki ki. You remind me of Comical Ali who kept saying that the republican army was slaughtering the Americans when aircraft carriers, b 52 bombers from the deserts of the USA, f16s and harrier jets were rains tom hawk missiles and all manner of bombs on baghdad!
Guys let’s put our heads together and solve the unprecedented ECONOMIC problems that has beset this nation. After the economy is sorted out, we can carry on quarelling as we nicely do.
You can’t afford to identity a problem thus fail to find a solution. This scenario is like a bush plumber called to fix a leakage. The solution to this problem is, remove all political appointees and replace them with professionals who will in turn implement sound policies that will work better for the country. Right now the situation in the financial sector is like a football team facing off with a cricket team, it can’t work.
THE SOUTH AFRICAN RAND’S FALL IS WORSE!
IT WAS AT R8.00 A FEW MONTHS AGO. ITS NOW AT R11.00 TO A US$. ITS IN A FREE FALL.
@Luapula. Everything has a time. This is not a time to play jokes. This Kwacha thing can distabilise the nation. Please stop the rhetoric and join other well meaning Zambians to seek a solution.
I implore all opposition leaders to declare ceasefire with Government and vice versa whilst this national emmergency is being attended to. We all live and shall perish in Zambia if we do not work together.
@Kulutu
IF YU EXPECT MY PEOPLE TO CAST A VOTE FOR SOMEONE WHO PRIVATELY HARBORS AND EXPRESSES TRIBAL SENTIMENTS, THEN FORGET IT, MATE,EVEN IF HE PROMISES TO BRING BACK THE POUND STERLING!.
NEARLY ALL AFRICAN CURRENCIES ARE IN A FREE FALL. PLEASE UPDATE YOURSELF.
I REPEAT : IF YU EXPECT MY PEOPLE TO CAST A VOTE FOR SOMEONE WHO PRIVATELY HARBORS TRIBAL SENTIMENTS, FORGET IT MATE.
@Luapula. There will always be in society people of your racial or tribal driven type. Rwanda had them. Hitler had them. Apartheid South Africa had them. And Zambia has you.
Very dull chap
Actually those saying it’s not just Zambia are 100% correct it’s all over the news this side, things are bad! The rentals on serving accounts and fees on internet banking with various banks are skyrocketing and the interests are diving deep end! Though some bloggers are making it political, it’s safe to say this seems to be an airbone inflation disease!
WE QUOTE ONE INDIVIDUAL WHO SAID,
“We people from North Western Rhodesia should unite. If we give power to these Bembas, we’ll never get it back?”, 2009. WE CAN VOMIT THIS INDIVIDUAL IF HE WAS FOOD. FINITO.
@Luapula SMOKES GANJA FOR SURE. I wonder wht type of a DEVIL is he and GOD WILL OVER THROW you with your IDIOCY. HE wil do wht He did to Nebuchadnezzer in the BIBLE.
@Cindy u r right but OUR CONCERN IS SKYROCKETING. These financial turndown r ALWAYS THERE but with our CURRENCY it worrying, thts a POINT especially to alot of us who r FAR from home.
We too make foreign contractors building roads, schools and universities and in the mines. At the end of the day, they send money in dollar form to their countries.
@G
WHO SMOKES GANJA?
@LUAPULA OR THE CHAP WHO SAYS, “We people from North Western Rhodesia should unite. If we give power to these Bembas, we’ll never get it back?”
IF YOUR BIBLICAL Nebuchadnezzar WANTED TO DELEGATE CERTAIN TRIBES TO SECOND CLASS CITIZENS THEN RESERVE YOUR VOTE FOR HIM.
@Luapula,
You shud STOP SMOKING chamba mufana iwe, uza kafwa.
Speak sense nlot this IDIOCY u speak. Get some sense u r just a caunt !!
Chikwanda must resign!
Please do not copy the content on this page
i suggest will sale the country to facebook for $1 million billion
A lot of people commenting here seem not to read what is currently happening in the world. The Dollar is gaining against all currencies. The South African Rand has dropped from 7.7 to a dollar last year to 11 to a dollar this year. That is worse than the Kwacha. But at the same time, the Kwacha has gained against the Rand and Botswana Pullar. So how can the Kwacha be worse than the Rand and Pullar. There must be hidden agenda here.
Damn
New Kwacha notes will be printed soon with each Kwacha rebased to 50 ngwee. Overnight Kwacha will become strong. CHIKI CHIKI Chikwanda has a magic wand.
Stop depending on copper period.