• Kwacha has been seen loosing value on a weekly basis.
• This has been noticed through increase in inflation rate because of not producing more as a country.
• Trade surplus recorded last month does not translate into more exports but reduced imports.
An Economist says the Kwacha has been losing value against major convertible currencies on a weekly basis.
Speaking in an interview with Money FM News, Shabdin Mweemba said this has been noticed through increase in inflation rate as the country is not producing more than expected, hence low exports.
Mr. Mweemba noted that the trade surplus recorded last month does not mean the country’s export levels were higher because this was due to reduced imports.
“We have seen that the Kwacha has continued losing value and on a weekly basis it’s getting weaker and weaker and the major reason the inflation rate which has gone up due to the fact we don’t produce much as a country so we are exporting less” Mr. Mweemba noted.
He said the country needs to consider increasing exports of goods and reduce money supply in order to have a soft maintenance of the local unit.
Mr. Mweemba stressed the need for government to also ensure that more investors come into the country to help contribute to job creation and improve the tax baseline.
“Last month we had a record of a surplus but that does not necessarily translate to say that our export levels were higher, the trade supply was mainly as a result of reduced imports. When government adheres to these strategies, we will see the appreciation of Kwacha and later have a stable economy,” he said.
The Kwacha is expected to post minor loses in the near term due to high demand and low dollar supply characterizing the foreign exchange market.
According to a local Commercial Bank, the local unit was little changed in yesterday’s trading session as the factors of demand and supply continue to dictate the direction of the US Dollar Kwacha currency pair, with only a pocket-size of foreign currency supply in sight.
It opened the day at K21.980 and 22.030 per dollar 1 ngwee weaker than the previous day’s close of K21.970 and 22.020 on the bid and offer respectively.