• There hasn’t been much investment that can support sustenance of the currency.
• Recent appreciation of the Kwacha was simply temporal.
• The country does not have the capacity to sustain appreciation of the Kwacha.
The Zambian Kwacha has continued losing value against major global convertible currencies standing at K18.27 and K18.63 today as quoted by some commercial banks.
In the last few weeks, the Kwacha has been depreciating despite having recorded a minimal gain against cumulative currencies after government and International Monetary Fund (IMF) reached a staff level agreement on in December 2021.
Many stakeholders have observed that the weakening of the local unit is due to high US dollar demand on the interbank market against low supply.
And an Economist noted that the Kwacha has been losing value because the IMF bailout package has not yet been finalized, as it is likely to be concluded in June this year.
Shabdin Mweemba told Money News in an interview that lack of adequate investments in various sectors of the economy is also contributing to the depreciation of the currency.
He said the recent appreciation of the Kwacha was temporal because it could not be sustained for a longer period on account of the country not having much exports apart from Copper.
Mr. Mweemba called for increased exports to help stabilize the local currency.
“We have noted that the Kwacha has started depreciating, this is due to the fact that we haven’t really seen the benefits of the IMF bailout, the payment hasn’t yet been done and that is likely to be concluded by June, and we have not seen much investment that can support the sustenance of the currency.”
“We can conclude to say that appreciation of the Kwacha was simply temporal because it couldn’t be sustained because we don’t have much export to talk about other than Copper. So until such a time we are going to see increased exports that we will continue seeing the Kwacha not stable. As at now, the country does not have the capacity to sustain the appreciation of the Kwacha.
And Mr. Mweemba said the Kwacha is expected to start appreciating around June when the IMF deal is concluded, and also when major investors start investing in the economy.
Meanwhile, for Car Dealers Association of Zambia, depreciation of the Kwacha is negatively affecting importation of cars as landing rates for vehicles purchased oversees have increased from K100, 000 to between K107, 000 and K108, 000.