The continued fluctuation of the Kwacha against major convertible currencies is been influenced by the high demand for supply of forex, a Financial Analyst Maambo Hamaundu has observed.
And yesterday’s trading saw the Kwacha closing five points stronger on the inter-bank at KR 5.275 to KR 5.295.
According to the Standard Chartered bank daily financial briefs the market had a fair balance of the trade on the sell and buy sides with dollar-Kwacha trading range.
Mr. Hamaundu says there has been a mismatch between the supply and demand of the dollar in the past months.
He said despite the country having recorded impressive copper prices on the London Metal Exchange (LME), the local currency has not been performing well.
He explained that copper has an effect on the country due to its nature of been a major export product, therefore when they are high copper prices the Kwacha is also expected to appreciate.
Mr. Hamaundu stated that the current situation means that despite the country getting enough dollars from copper exports the demand always outstrip supply.
He has further appealed to government to find a lasting solution to the problem which can only be achieved through the creation of more manufacturing industries in the country hence minimizing the levels of imports which also contributes to high demand for the dollar.
The Kwacha has continued to fluctuate in its performance trading in the range of K5000 and K5300 to one United States dollar (US$).
However, prices of copper on the international market have since last year enjoyed a fair and according to LME by Monday 14th January 2013 the commodity had gained by 0.6 per cent to trade at US $8,089 per metric tonnes.
ZANIS
THIS COULD SIGNAL A DROP IN INTERNATIONAL CONFIDENCE FOR WHAT IS CURRENTLY GOING ON.
I HOPE THIS WILL ONLY BE IN THE SHORT RUN. ANYWAY BANK OF ZAMBIA WILL INJECT MORE DOLLARS TO STABILIZE THE MARKET.
IN THE LONG RUN, IF THE INTERNAL SITUATION IS NOT ARRESTED, THERE COULD BE AN INCREASE IN FUEL PRICES LEADING TO HIGH PRICES AND INSTABILITY.
YOU DON’T HAVE TO BE AN ECONOMIST TO PREDICT THIS!!!!!!
U sound like an economist, by your use of word such as short run, long run, inject more dollars, if you are not then you are very sharp brother.
Well, this is it. Prior to the kwacha-lisation, there were a lot of demanders who were operating underground. Now, you have all that underground activity brought out. Being a net importing country, it is expected that copper revenues cannot provide all the needed forex to meet the import bill. Worst still copper revenues are always in offshore accounts most of the time.
IT IS UNUSUAL FOR THIS PHENOMENUM TO HAPPEN IN JANUARY. USUALLY IT IS DECEMBER. ANYWAY LETS OBSERVE AS MATTERS UNFOLD
IT WAS 4,800 ON 20/09/2011
Styupid analysts!, what else did they expect the fluctuation to be due to?
If the demand for dollar or whatever is high then kwacha looses value….simple, why did they have to ‘analyse’ to come up with such an obvious statement?
They wanted to ascertain the cause(s) of increase in demand for the dollar. Has the trend been broken from the usual cause – copper? What else happened this time around and how far reaching is the impact?
Exactly, Fumbelo, If the analysts had any clue about what they were saying they would have told us what has caused the increase in the demand for the dollar. Not telling us that when dollar is in demand kwacha looses value,. Everybody already knows that…………..who pays these people, the so called analysts?
if we could only penetrate or rather formalize trade with DRC, we could earn lots potentialy more than copper, you see DRC depends on zambia for all there basic needs, problem is that, the food stuffs cross via black market..but i cannot blame GRZon this one as GRZ has for a long time now, tried to formalize trade agreements with DRC, but abena congole officials want the black market as the officials make a killing extorting traders..but if the deal pulls through, we will be exporting everything from maheu, to eggs, to mealie meal, flour, rice, colgate, name it…..
Not making much senses is it. It could be due to the economical fundamental such as a December rise in inflation and on the other hand the dollar is not been seen has a safe haven since the Fed terminated Q3 . it’s true kwacha is correlated to copper price. The rise in copper price been tributed to the Chinese boom in construction industry over past years. How needs dollars when other major currencies are performing better?.
Ever since the PF came into power they have failed to stabilise the Kwacha and inflation. It is likely by the end of this year the exchange rate to be $1USD=KR8.50 / $1 USD= K8500 the truth will be seen when the rebasing period is completed after June.
Me i think this has to do with rebasing where by those that buried the money are slowly injecting it in the economy.
To finish up my above point is that this earthen money slowly finds its way in the banks to exchange for a dollar and bury it again or external it.
Sorry I meant to say “externalize”.
Hi, just wanted to say i liked this article.