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Economist attributes Kwacha stability to government policy pronouncements

• There is some bit of stability on the Kwacha against major convertible currencies.
• A number of factors are causing the stability.
• One of them is the financial sector that is positively responding to government pronouncements.

Over the last few weeks, pockets of pressure on the Kwacha continued due to the stronger international performance of convertible currencies and high US dollar demand against limited supply among other factors.
Despite the overall depreciation recorded over the last few weeks, the Kwacha has generally demonstrated its overall stability and the resilience of the Zambian economy, by remaining within acceptable margins of variation and fluctuation.
According to an Economist, this stability is as a result of the financial sector’s positive response to government pronouncements.
Partner Siyabutuba told Money FM News in an interview that apart from Positivity and stability in the policy statements and policy arrangements, the Central Bank has also put in place some significant control measures to ensure that the Kwacha does not depreciate out of control.
Mr. Siyabutuba also noted that government’s move to offload maize to the international markets few months ago is also contributing to the appreciation of the local currency because the country got some United States dollars from the export of the crop.
“We have seen some bit of stability on the Kwacha against major convertible currencies and quite a number of factors are causing the stability and one of them is the financial sector that is positively responding to government pronouncements. Bank of Zambia has also put in place quite significant control measures to ensure that the Kwacha does not jump out of its position.”
“But significantly, a few months ago government was offloading maize to international markets so they got a few dollars that came in partly contributing to the strength of the Kwacha because we received a bit of dollars from the export of maize. So I think that the money market is positively responding to the current government policy position,” Mr. Siyabutuba noted.
Meanwhile, Mr. Siyabutuba noted that the current stability of the Kwacha is one of the reasons why the country did not experience an alarming hike in fuel prices.
He said it is everyone’s hope that the local unit will remain stable so as to alleviate the impact of the cost of crude oil on the international market.
“I think this is the reason why we even experienced a kind of not alarming increase in fuel prices because countries along the region are having challenges with fuel increases owing to the depreciation of different currencies.
“But because of Zambia’s currency performance against the US dollar, even when we are buying oil products at an exorbitant price from the international market, the Kwacha’s strength against the dollar is the reason why we got K4 and a small ngwee fuel increment, it could have been worse without the strength of the Kwacha against the dollar,” he stated.
Last week, the US Dollar was buying at K17. 86 Ngwee and selling at K18.21 Ngwee, and today Wednesday 6th April 2022, some commercial banks in Lusaka have quoted the currency at K17.42 ngwee and K17.77 ngwee respectively.

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