The Bank of Zambia yesterday assured that it was putting in place necessary interventions to stabilise the Kwacha that has slumped against the dollar in view of the United States’ decision to reduce the amount of its currency on the international market.
On Wednesday, the Kwacha hit a record low of K6 against the US dollar in over two decades.
The central bank, however, advised foreign market participants not to panic, adding that Zambia as well as other emerging markets have been affected by the US’s decision.
BoZ head of public relations Kanguya Mayondi said in a statement issued on Thursday that the reduction in the US dollar liquidity supplied through quantitative easing programme is affecting several emerging markets and Zambia is not an exception.
“Specifically, the Federal Reserve’s course of action has led to fears of slow growth of major emerging economies particularly, China,” Mr Mayondi said.
He said the price of copper, Zambia’s major export earner, remains subdued and is undermining investor optimism.
Mr Mayondi said the depreciation trend in the exchange rate observed overtime is also due to a combination of domestic and international market developments.
Mr Mayondi said the consistent economic growth Zambia has recorded over the years has led to a steady increase in imports, particularly capital goods for sustaining of the growth.
He said although exports have also continued to show impressive growth, demand for imports has relatively been stronger and is contributing overtime to the exchange rate depreciation.
Mr Mayondi said the bank has, however, observed that panic has gripped market participants and is undermining the smooth operation of the foreign exchange market.
Mr Mayondi said the central bank has tightened monetary policy to stay on course with the attainment of the inflation target of 6.5 percent.
He said liquidity-draining open market operations have been stepped up while the recent increase in the statutory reserve ratio is expected to take effect on Monday next week.
The weaker the better so its cheaper to buy anything in z
Just bring back the Zeros!
BOZ has just worn the condom after sex.
@ Vilifier
Next step, long shower?
@ Jo
It is cheaper if you are going to use USD to buy Zambian produce. Unfortunately, we are paid in Kwacha and majority of every daily necessities are either imported or have imported component. Therefore your suggestion is out of consideration as eating copper its not particularly healthy.
Its surprising that some PF minions are pretending not to be worried by the falling Kwacha. Such people have no heart or sympathy for fellow Zambians at home including their extended families. The fall in Kwacha is only good for some us in foreign countries like the UK because we can save a bit when sending money at home. But this is not a cause for celebration at all if you really love Mother Zambia are doing businesses in Zambia like some of us are doing.
Weaker currencies are only good when the country can manufacture most things they use from buttons to high tech machinery. For countries like Zambia where real terms manufacturing in primary producer industries(Raw material extraction and crop growing) the fall in the currency is a huge draw back.SATA AND PF are responsible for…
One other thing I think is putting the Kwacha under so much pressure is the huge amount of fake kwacha imported from Congo, China, Europe and Tanzania circulating in Zambia undetected by innocent currency dealers and the Banks.
BOZ with the help of the government should roll out high quality consumer affordable fake money detectors to curb the problem.
Here in Europe a scum has been uncovered where billions of fake paper and coin money is manufactured and shipped to different destinations including Africa. For poor countries Zambia where is there rampant corruption from the very top, such fake currency easily finds it way into circulation.
Sata and PF ignore my advice a your peril!
Kambimba says Sata will not enact the constitution until the poverty levels diminish in Zambia. Now you wonder what poverty he is talking about as the basis to enact the constitution?
My analysis of his latest excuse is that, the poverty levels he is referring to here means the low support the PF had in 2011 and the diminishing support right now. So for as long as PF continue to lose support they will not enact the new constitution.
On Wednesday, the Kwacha hit a record low of K6 against the US dollar in over two decades.
Congrats PF you managed to attain this record in two years of being in power! When we said you do not have sound policies to run the economy you argued till the sun went down. See you have no idea what is hitting you right at the centre of the arena. Yes, for free here is what is happening; you govt is full of corruption, poor taxation policies, tribal appointments, poor planning, no fiscal discipline, poor agri policies hence food soon will hit all time records and you are advisable lot.
can someone please tell us how other currencies are doing compared to a dollar. eg how is the rand, pula,
The last time I checked, the Rand was the weakest against the U.S. dollar and this despite SA being Africa’s largest economy. I also know that the Namibian dollar has not been significantly strong against the Euro since a lot of Germans still like spending “cheap” vacations there (as they say).
However, I believe that African currencies will generally continue to be weak in value against the major currencies such as the US dollar and Euro because of a deliberate strategy by developed countries to control our markets and stifle our economic growth.
Another problem is the pouring in and off-shoring of funds through non-transparent structures e.g donor funding, profit-laundering by multinationals and so forth.
@Nine chale
`the Rand was the weakest against the US dollar“ Rand weakest?? you are way offline brother,,, what is your source?
@fake zambian lawyers & ndobo
As at yesterday close of business the South Rand was trading at
– ZAR 1.00 = ZMK 0.55 ngwee
– US$ 1.00 = ZAR 10.73 cents
– US$ 1.00 = ZMK 5.97 ngwee
– GBP1.00 = ZAR 17.95 cents from a high of ZAR 18.55 a few weeks ago
– GBP1.00 = ZMK 9.99 ngwee
Clearly ZMK is still the heavyweight champion of African currencies. A little depreciation of the kwacha could be beneficial if the economy was export driven but alas people are worrying because we are a net importer. This situation isn’t good at all and should be reversed.
@ Ndobo yes, given the growth potential of a currency in an economy the size of the South African one, the Rand has indeed been the weakest compared to other currencies on a global comparison scale. You can check any source and you will see that the Rand has been weakening against the US dollar since 2013. R10.73 against the US dollar is not particularly strong is it?
Its true fellow Zambians i ve also witnessed here in Tanzania were the Local Currency Tshs is Getting weak each and every now and then. In December last year local currency was performing well at about 1 usd = tshs 1596 today 1 usd =tshs 1627 u can calculate the percentage of falling. so its not only zambia wich is affect by decision made by Federal Reserve’s course of action . So the move by the Government should commended.
@ buldogs,
In Tanzania you can find which step BoT has taken, unfortunately BoZ its no so much in to stating about the steps taken. It is more general lack of confidence in the “new” administration which in past two and half years has done utmost to create atmosphere of deceit, corruption , disregard to the role of law that people have reached stage than they are filling not just abandoned and deceived that confidence in better tomorrow has become distant dream.
It is sad fact, but is a naked truth.
The problem is what Dr Mumba said.These PF Cabinet Ministers with their counterpart BOZ cadres,don’t help Sata to advise him on important Economic Issues.They just know how to spend and borrow.In fact I know that all the Reserves MMD left is already spent/eaten.Zambians prepare for harder times to come.and already hard times have come
I honestly think there is nobody at BOZ who knows anything about why the Zambian kwacha is sliding badly against the US$. We all realize and appreciate the negative effects of the US Federal Reserve’s decision to reduce the amount of its currency on the international market. However, the primary reason the Kwacha is depreciating at such a supersonic rate is because of the government’s colossal unbudgeted for expenditure and the resultant reckless borrowing to support Ukwa Chimbwi No Plan’s clueless ventures especially in Muchinga. Just ask them the interest they are paying on the Euro bond alone, you will be shocked. We are in maningi trouble with this clueless stinking lot!
“He said the price of copper, Zambia’s major export earner, remains subdued and is undermining investor optimism.”
BULLSHlT! It is a bunch of STUPlD M0R0NS called PF that have no idea how to run a countries economy. THAT is what is what undermining investor optimism.
Every stupid comment by Sata drops the Kwacha another 1%. And Kabimba saying “we did not have enough knowledge” drops it by 5%. And Scott saying he does not trust Sata and he will call in paramilitary drops it by 50%!
Meanwhile DRC copper production is about to overtake Zambia. Wake up you IDI0TS. The solution is to kick these F00LS out!
What needs to sink fast in our brains is PF has done enough damage already to our economy and that they have run out of ideas on how to fix this!
The honorable thing is to have them impeached at this stage to prevent further damage to our already fragile economy.
I refuse to trust anyone at this stage!
We need to transfer power from the president to the people through parliament or risk getting disappointed all the time.
In 2011, people believed Sata will do this and that because Sata had managed to cheat them that he was man of action.
Through the provisions of a well-done constitution, the position of president should just be ceremonial. The cabinet should be appointed and ratified by parliament. We should have a clear mechanism for firing a failing govt like PF. No room for…
You seem to misunderstand certain things: the president or the government are not solely responsible for the success and failure of the economy. Problems like inflation and currency depreciation are worldwide setbacks that require collective input from all sides from economists, businesses, skilled workmanship and not just politicians.
Instead of shouting for impeachment (which is 0.09% likely to happen), it would be more sensible to start thinking about solutions that go beyond the traditional way of government-led policies – for instance how we can effectively invest in infrastructure, technology and skills development and be able to establish domestic industries.
After all, you can be sure that though the political players may change, the game pretty much stays the same.
IF u went to skull to learn how to cautch fish u better not contribute to something which u don`t understand . U are purely a tribal Tonga Bull .
Guys olo fyakosafye fintu,what is happening to this country? Where are we going with this government,chankalipa sana,no job creation,inflation to keep on increasing,is this what we expected as mo money in our pockets and lower taxes?Ba PF twapapata poseniko amano! I regret waisting my vote for you,or what u hear everyday wen u wake up are useless by-elections at the expense of derailing the economy instead of development,ha malabishi! I wonder the intetion of this govt.
Everyone is focusing on the dollar. . . The pound and euro, the kwacha has walked on those also, explain that. I think investors are wary because of the policy direction Zambia has been under over the past 2 years. the way we have been spending and borrowing paints a gloomy picture. I wonder wat those supporting the president are thinking. Are they thinking, things will sort themselves out?
Everyone is too busy looting while the ‘getting’ is good. They couldn’t give a rats a*s what happens. The kabwalala’s in FTJs time got away with it and these guys don’t want to miss out on the bonanza. Eurobond money is all over the place, giving women wet pussies and men stiffy’s. Go look at the Chilanga houses. No normal money can pay for diggs like that. If I knew one of them, I’d sell my left kidney (but keep my genitals) to get one of those ‘bond’ contracts.
The BOZ has more Doctors at economics per square meter than any other institution or piece of real estate in Zambia. The hassle is with the political appointees like the Kakokota guy they tried to slide by us. Online university of Liverpool graduate. Wouldn’t know a J-curve or how to handle open market operations. Top that off if a thick secretary of treasury and a dunce of a finance minister that couldn’t find his way out of a wet paper bag and give that to MCS, the modern day ‘Idi Amin’ radio controlled by a whore-moan-al wife and viola, hey presto. F*ck ups by design and barrelful.
Spot on…too many economics PHD holders at BOZ. BOZ job is a hands on job that needs savvy individuals from a retail banking background. This is the problem when you have too many dinosaurs stuck in the by-gone era in appointing authority.
Not convincing at all. It looks like the BOZ is failing again to manage the FOREX operations effectively once and this is going to hurt the Zambian economy big. I am not re-assured by these trial and error actions from BoZ
It is not true that USA has withdrawn its Dollar from the international market. I believe Kwacha has been shaken by all international currencies. Kwacha verses Pound, Euro, Rand and Pula, all these have beaten our kwacha. The thing is that we can not admit where we are wrong but we want to justify ourselves to show our innocence and that makes nonsense to those who know the problem.
We are in trouble and poor people are the ones who feels it hard.
‘reduction in the US dollar liquidity supplied through quantitative easing programme is affecting several emerging markets and Zambia is not an exception.’
Why should actions by another country of merely reducing supply of paper money affect our paper money and the economy so much. That is why we should empower our people especially Engineers to start Manufacturing including the long awaited Industrial development corporation. The economies we admire so much were built by Engineers. Any intervention by BOZ is just temporal.
Instead of the CEEC empowering people who just make guest houses, they should empower Engineers to start manufacturing or to buy machinery for things like road construction. For example, empower a group of engineers to start manufacturing taps and other plumbing materials and at the same time ban importation of such products as long as they are of the same quality as the imported ones.
If the economy is dependent on merely what other people think and feel about it at any particular moment(the so called investor confidence), then something is fundamentally wrong somewhere. It is like a prostitute whose market value is dependent on her physical beauty. All of you economists out there need a new lesson from the SPARTAN.
@ spartan
Whilst I agree with principle guiding your contribution, there should be vigorous drive to create predictable legislative base to promote trade, agriculture, tourism and industry.
Unfortunately current administration spends all their time already fighting next election instead of creating legislative base to pull the Country out of poverty.
142. I know you are intelligent and probably more knowledgeable than I am but you don’t want to share your knowledge for reasons best known to yourself. But remember when Zambia goes down, you go down in one way or the other.
@ Spartan,
Thanks. On this forum I have been called all sort of names but never “intelligent”. As to sharing knowledge, there are thousands Zambians with all sort of qualifications which can explain better than me in a plain English. Unfortunately, in order to show their level of qualifications and presumed importance, they are sticking to official mambo-jambo which is beyond understanding of the average Zambian.
As to me going down with Zambia, sorry but you are thousands and thousands miles of the mark.
It is not my fight,
@Spartan and 142. Your dialogue is constructive. I add some comments at 21.1-2.
At Spartan, you say .. But remember when Zambia goes down, you go down in one way or the other.
Your reminder is what should drive all of patriotic goodwill to come and put their shoulders to the wheel. It should now be plain to all that the PF leadership has failed on economic management. That is a fact. So to wait for a miracle and criticise the obvious in insanity. For how can you contine criticising a blind maid with your child on her back and seeing her walking towards a ditch without pulling her out of harms way? She will perish with your child!
……..So to wait for a miracle and criticise the obvious is insanity.
142. What I mean about you going down when Zambia goes down is that you will also feel the negative effect of the economy either directly or indirectly through your relatives. Unless you are not a Zambian.
The rate at which things are going,economically,socially,culturally and constitutionally,no matter how the PF plays those MMD imported tricks from the late master engineer,2016 is for the other party other than PF.
Watch this place,kwacha hitting K 6 to a Dollars . Drop those relatives in these strategic positions.
Saoulosi where are you to defend your government, just like HH said the failing kwacha is a reflection of how bad your party is ruling, they have abandoned their promises telling us how impossible to fulfill 90 days promises, no sense of responsibility always blaming others, now smart people are realizing how fake PF is, how do you instill confidence in the economy when you lie all the time, and you have no proper roadmap
To strengthening the economy,
Ba ‘diaspora’ It’s time to show your real salt and what you are made of now. Take your $$$$$$ savings back home and invest in Zambia. It’s all well good sitting in an armchair and shooting from the hip but the reality is right on the ground back home. Prices of large investments like prime plots of land, houses, warehouses and the like will not go up in price overnight following the yoyo effect of the kwacha. You will be surprised at the large number of people who don’t understand the exchange rate in Zambia. It’s time to snap up some bargains and bring development closer to the people.
How can you invest your savings in a unpredictable economic environment without taking in to consideration that at the helm of such economy are Mr. Donald Duck and Mr. Mickey Mouse which think that issuance of endless Statutory Instruments (often contradicting previous one) is a right way to stimulate long term economic development and investment?
A BIG QUESTION TO CEEC WHEN IS DISBURSEMENT OF FUNDS FOR 2013 GOING TO BE DONE? CEEC should step in to make sure Finance & NATSAVE start without delay, surely how can funding take more than a year, we started the process in Feb 2013 now we are in March 2014, What is the Minstes of Commerce & Trade saying about this? Hon Kabimba, was saying that there is too much poverty for the PF govt to work on the constitution, So how do you justfy banks holding CEEC empowerment funds for now 3 months, without releasing it, God help us.
school is very important. ba wantanshi you have to rebase the Rand or any other currency before you start comparing strength. This PF theory of dropping zeros and claiming victory will land us in Zimbabwe
Bufi, Buhata, Kubeja….the BOZ ba.sta.rds are bloo.dy liars. What measues have they put in place…the statement is not even worth coming from the discredited EMPTY HEAD Chiyondi Mbangulwa
Show me which section of society or any part of national program that is doing well nowadays. From health to education to transport, agriculture, public order, judiciary, job creation etc nothing flourishes under PF. very soon before 2016 Kwacha a dollar will cost K12.
I know more than one:
“Cadres of PF’,
“A-TEAM” and theirs minions,
“Useless MP’s”,
Huge number of parasites in various High Commissions….
It is not in Zambia’s interest for the Kwacha to slide to K12 per green back as happened under Gono accross the Zambezi. And it is not in your interest, however detestable you might find the current regime.
It’s insulting an illiterate cook and watching as he adds Cyanide poison from a bottle oblivious that it is NOT cooking oil. Though you may not die having seen this act of manslaughter, your relations and other people will die upon even tasting this food. And YOU will be an accessory to that manslaughter nay for you it is murder. So let us help the BOZ and crew sort out this mess we are in. There is no political mileage to be gained in times of national disaster. Trust me.
People with money do not care, it is people like you and I who feels the heat when the kwacha depreciates. People whose faces are known by the presido know nothing about inflation and kwacha depreciation. I import and sale cars, nafibipa ifintu mu pf.
I like the perchance and temerity with which the Zambian govt is tackling the USD-Kwacha issue. It is not only a Zambian problem but a general canker to developing countries. Ghana like Argentina, South Africa, Et al among other top ace developing countries are rocked with this currency issue but that is an issue all countries have to deal with in terms of Manufacturing consumer goods instead exporting and importing finished goods. Russia,U.S,Germany, China,Canada,Italy,U.K, et al with continue to exploit for their developmental interests especially U.S and U.K.
Wish the Zambian republic well just like my country Ghana.
The dollar gaining is a strategic influence by the developed countries. The buying price of commodities is solely as controlled by economically stable countries who take advantage of under developed. Zambia is under developed and our major source of income COPPER and is being given a driven price by powerful nations. Because we are poor we will have no option but to accept the lower price. Moreover as a country we are faced with a lot of challenges. You find at that moment civil servants will also ask for their salary increase,drugs at the hospitals needed etc. Sometimes its us zambians contributing to such problems because we put the govt under pressure where decisions are made without proper reseaching and verification!
It is very clear we just have armchair critics on this site who don’t have an aorta of economic analysis. All they see are politics. I bet they are on war path to ensure their preferred candidate wins and subsequently earn a free ticket back to Zambia. Do some work people.
@Suntwe. Perhaps people take a partisan view given entrenched polarised gridlock positions that stangleholds our country. But there is time to fashion spears into pruning hooks and swords into ploughshears. As Dennis Liwewe of the legendary commentaries of th 70s and 80s would say, ‘…..yaya we are in trouble as the enemies push into firing range!’
And these are some suggestions to help our colleagues at BOZ stem the run against the Kwacha.
1. The Kwacha is being abandoned for foreign currency holdings (includig Sterling, Pula etc)
2. The BOZ, State House and MoFNP need to restore people confidence in the GOVERNANCE of the country (political and economic). The recent consitutional standoff and fights with investors like KCM and introduction of socialist policies…
2. ………The recent consitutional standoff and fights with investors like KCM and introduction of socialist policies (INDECO) and other ill concieved statements are causing fear. And fear drives people to abandon a currency. Sentiment is the currency that determines the way the Kwacha behaves.
3. The BOZ should tighten access to foreign currency transactions especially for huge outflows that are done by non-foreign exchange generating entities.
4. The MoFNP should remove corporate, VAT, and duties for the next TEN years on import substitution, export promoting and manufacturing companies. This will stimulate production. Chiluba did it on transport by waiving duties and flooding our roads with mini buses and mazhandus.
Copper price has seen the largest unprecedented fall in recent times. Surely, this will impact adversely on the strength of the Kwacha. Contemporaneously with that, marginal mines such as Mufulira and Baluba (possibly Chibuluma) could go under and be placed on care and maintenance. THIS IS EVIDENCE THAT WE NEED A WEAK KWACHA TO ASSIST THESE AILING MINES. The fallout in lost tax, mineral royalty and spending power of the workers could be catastrophic for Zambia and the economy!