• The Kwacha has depreciated due to the effects of the war in Ukraine.
• Zambia has been demanding more of US dollars in order to buy crude oil.
• The country has been depending on investors to invest in the economy and bring their dollars.
An Economist has attributed the depreciation of the Kwacha against major global convertible currencies to persistent high US dollar demand on the market.
Speaking in an interview with Money FM News, Shabdin Mweemba stated that the country has been demanding more of US dollars in order to buy crude oil which has become expensive in view of the war between Russia and Ukraine, thereby putting pressure on the Kwacha.
Mr. Mweemba said Zambia largely depends on the supply of dollars by investors who invest in the economy using the foreign currency to help reduce pressure on the Kwacha due to the fact that the country does not export more.
“It has depreciated due to the effects of this same war so it means that we are demanding more of the US dollars so that we are able to buy the oil which has become more expensive. So that pressure is contributing to the same, and the other thing is that we have been depending on the supply of the dollars, not really us exporting but we have been depending on investors to invest in the economy and bring their dollars,” Mr. Mweemba said.
He further noted that when mining firms are paying salaries to their employees, there is high demand for the Kwacha because the firms usually convert their dollars to the Zambian currency, and this helps to cushion pressure on the local unit.
“When we export through mining, it also helps us to stabilize especially when they are doing their payrolls, there is demand for Kwacha because they demand a lot of Kwacha to convert their dollars in order to pay their employees. So we hope that all the mines will be fully operational so that we can have enough dollars to be able to cushion the Kwacha,” he stated.
And Mr. Mweemba reiterated that International Monetary Fund (IMF) bailout package will play a major role in stabilizing the currency once approved.
“We hope the IMF bailout will come in quickly because it will be the big one in terms of stabilizing our currency.
The US Dollar is buying at K17. 89 Ngwee and selling at K18.26 Ngwee.