Kwacha 8th worst performing currency

By Daily Revelation Editor

The Kwacha has weakened further and is now the eighth worst performing currency in the world among those tracked by reputable institutions like Bloomberg.

The Kwacha is now back trading in over the K27.5s against the United States Dollar, the same ranges the currency was trading at the beginning of this month. The Kwacha, however, briefly appreciated to around K22 at some point in the month, as has now become a custom where temporal appreciations in the local currency are followed up by huge depreciations. This is in keeping with the trend that has been established since October 2022.

During the last Bank of Zambia (BoZ) Monetary Policy Committee press briefing where the central bank increased the Monetary Policy Rate by 100 percent basis point to 13.3 percent, BoZ Governor Denny Kalyalya boasted that what was causing the Kwacha to gain against the Dollar that time was a combination of factors among them tightening of the availability of the Kwacha on the local market.

“Last week some of you have a kin eye have seen that the Kwacha gained some of its lost ground. In particular Thursday, Monday and today. Now what are the factors that have brought this about. I refer you to the point made at the beginning that this decision we are making, is in addition to the earlier decision we made. So the earlier decisions are beginning to influence the behavior of the exchange rate, by tightening the availability of the Kwacha,” said Kalyalya when the Kwacha briefly appreciated.

That was the BoZ Governor saying that the earlier decisions made were beginning to influence the behavior of the exchange rate. However, it seems the earlier investment the BoZ invested in so much only lasted for one week. Kudos to BoZ indeed, and then this is the Governor whose word is expected to assure Zambians in terms of the stability of the monetary market, yet the huge investment he put in so much into could only yield results for a few days. The Governor’s best surely wasn’t good enough.

But we understand that there is very little he can do in terms of ensuring stability in the monetary market given the huge challenges besetting this nation, some caused by nature and some on account of the government’s omissions.

Ensuring stability in the exchange market will remain elusive for this import dependent economy, especially during now when the increased burden for food imports will escalate on account of the poor harvest from the very poor rains plus the increased cost on energy imports. And we seem to have a government that seems to be more determined in ensuring that the country does not get enough from the mines, the main forex earner for the country.

There is only so much Kalyalya and his people at BoZ can do without the necessary push from the fiscal side.