By Merlyn Mwanza
The sluggish performance of the Zambian Kwacha against the United States Dollar and other major convertible currencies shows no signs of abetting.
The Kwacha is today trading at K21.33 to US$1.
The local currency, which embarked on this downward trend from October 2022, albeit some sporadic appreciations which are followed by sustained downward spirals, is threatening to worse the already high cost of living, from the speculated further upwards adjustments in fuel prices to general price increases in the economy, especially for an import driven economy like Zambia, and subsequently the high cost of living.
Several measures undertaken from the monetary side by the Bank of Zambia (BoZ) to stem the downward spiral have not yet had the desired effect, both in terms of arresting the inflationary pressures and the Kwacha slide.
BoZ in August, 2023, increased its benchmark lending rate by 50 basis points to 10.0%, noting that inflation had moved further above its target and was expected to stay high.
It was the third time this year that the bank has raised its key rate to try to tame inflation, which rose to 10.3% year-on-year in July from 9.8% in June.
Inflation is expected to average 10.2% in 2023 and 9.3% in 2024 and the first half of 2025, well above the target range of 6% to 8%, the central bank said on Wednesday.
