• In the medium term the ones that handle currencies which is the Central Bank, have already done their plan.
• They have established that between 2022 up to 2024, they are aiming at seeing the currency in the range of K 17 to K21.
• In the long term they want it to come down to somewhere around K15.
An Economist says Bank of Zambia has already established that it is aiming to see the Kwacha in the range of K17 to K21 in the medium term, which is between 2022 and 2024.
Speaking when he featured on Money FM’s Policy, Power and Money radio program, Noah Kabwita however said in the long term, the Central Bank’s goal is to see the currency come down to K15 for the economy to start registering positives.
Mr. Kabwita explained that the idea of 2023 is still about economic recovery because the country has not yet hit the level of economic growth, hence the Kwacha also needs to be dealt with.
“In the medium term the ones that handle currencies which is the Central Bank, have already done their plan, they have said from 2021 up to somewhere 2024, the target of the currency where it will be operating they have established that. They have established that between 2022 up to 2024 somewhere there, they are aiming at seeing the currency in the range of K 17 to K21 in the medium term.”
“In the long term they want it to come down to somewhere around K15 or so, that is the goal because once we operate below k15 per dollar, then the economy will start registering positives. That is why you have heard that the idea of 2023 is still about economic recovery because we haven’t yet hit the level of economic growth, we are yet to so the currency also needs to be dealt with,” Mr. Kabwita said.
He added that the current weekly effects that are happening to the Kwacha are just as a result of what the Central Bank has already planned.
“That is why you have seen the medium term projection or maybe yearly projection for the Kwacha to operate is somewhere like K15 to K18 for 2023 but the issue when it happens like this, is as a result of the players themselves.”
Meanwhile, Mr. Kabwita reiterated that the Kwacha is still under pressure due to the continued importation of fertilizer and fuel because more US dollars are needed in order to trade on the international market.
“We are talking about imports and then the issue of acquisition of fuel and fertilizers because these things are still being imported until we get our own capacity internally, we are still getting them from outside so we will need more dollars for us to trade on the international market.”
“As a result, any huge area that needs to be addressed for example fertilizer, fuel and then the issue of power, how do you subsidize it for the sake of cushioning your impact, instead of it being 24 hours of load shedding it becomes to 12, so all those moves are interventions that are speaking to affecting even the performance of the currency,” he stated.
As of Thursday January 5th 2023, the Kwacha/USD rate has increased by 0.37% to K18.18 from K18.11 in the previous trading session.