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Now Zambian Kwacha Weakens the Most in the World after Ukraine’s Currency
Zambia’s kwacha weakened for a fourth day, the world’s worst performer after Ukraine’s hryvnia, as dollar supplies in Africa’s second-biggest copper producer dried up and the price of the metal stayed near a 44-month low.
The kwacha retreated 2 percent, heading for its biggest drop since December 2012 and the most among 24 African currencies tracked by Bloomberg, to 6.265 per dollar by 3:43 p.m. in Lusaka, the capital. The kwacha dropped 11.5 percent this year, Africa’s worst-performing currency. Copper for delivery in three months headed for its biggest one-day drop since March 13. Yields on the nation’s dollar-denominated bonds due September 2022 rose to the highest since Feb. 25.
“The currency is caught in a bit of market panic, with importers covering their forward-currency commitments and exporters sitting on the sidelines, waiting for the kwacha to go a bit higher” before repatriating foreign earnings, Nema Ramkhelawan-Bhana, an Africa analyst at Rand Merchant Bank in Johannesburg, said by phone. “We’re seeing a liquidity crunch caused by” factors such as lower copper prices and emerging-market risk aversion, she said.
The Bank of Zambia has used $178 million of its foreign reserves and raised its benchmark lending rate to a record to support the local currency. A weaker kwacha poses risks to inflation in a country that imports items from oil to clothing, while also pushing up external debt repayment costs. Concern that growth is slowing in China has weighed on the price of copper, which accounts for 70 percent of Zambia’s export earnings.
‘One-Way’
The Zambian central bank’s low level of foreign-exchange reserves meant it’s ability to support the kwacha is weak, Ramkhelawan-Bhana said, making the currency a one-way bet. The currency is undervalued given Zambia’s economic outlook and should recover to below 6 per dollar in coming months, she said.
Infrastructure investments and expansion in mining, including projects developed by Vancouver-based First Quantum Minerals Ltd. (FQM), are set to boost growth to 6.5 percent of GDP this year, faster than the sub-Saharan African average of 6 percent, according to the International Monetary Fund’s October World Economic Outlook. Agricultural output may climb, allowing corn exports, Vice President Guy Scott said March 7.
Spending reforms by President Michael Sata, whose 2011 election victory ended two decades of rule by a single party, were met by a Fitch Ratings downgrade last year deeper into junk. Sata, 76, has focused on developing roads and railways in the $21 billion economy and sought to harmonize civil-servant salaries that drove the budget deficit to 8.5 percent of gross domestic product last year along with food and fuel subsidies..
Zambia Overtaken
Copper, used in plumbing and electrical wiring, for delivery in three months has fallen 12 percent this year, last week touching a 44-month low. Zambia, which mined an estimated 830,000 metric tons in 2013, was surpassed by the Democratic Republic of Congo as the continent’s top copper producer, according to the U.S. Geological Survey.
Yields on Zambia’s $750 million of debt sold in September 2012, which began trading at 5.16 percent, have climbed 305 basis points since then to 8.21 percent. The securities lost 11 percent in the past 12 months, compared with a 17 percent return in African sovereign bonds, according to JPMorgan Chase & Co. indexes.
“Local demand for the dollar, net dollar outflows from emerging markets and negative fundamentals, such as weakening copper prices continue to weigh heavily on the Zambian currency,” Zambia National Commercial Bank Plc analysts, including Virginia Mwalilino, wrote in an e-mailed note today. “The local currency is expected to remain on the back-foot.”
(Source : Bloomberg)
Posted by Editor
on March 18, 2014. Filed under BUSINESS, LATEST NEWS.
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Impeach Sata
March 18, 2014 at 7:37 pm
The PF have failed. Sata and his chaps must get out. We need HH to come and take over as soon as possible.
zedman
March 19, 2014 at 2:22 pm
IMPEACHMENT BANE,WE CANT AFFORD TO WAIT FOR 2016,OLOFWE UTUMA PROTESTS
CHS
March 19, 2014 at 5:08 pm
Thank you for the overwhelming support. Now see our new and improved store at WWW(DOT)CHRISTINESHEALTHSHOP(DOT)COM. Click on PRODUCTS and see the various products we have to offer. Best regards!
Corncend
March 18, 2014 at 7:42 pm
To many imports in the country zambian govn shuld put limits .
Possible
March 20, 2014 at 11:03 am
This is the thickest person online…
kayula
March 18, 2014 at 8:35 pm
May the Ministry of Health think of introducing phone Doctors. if I have a medical problem i call the Doctor on that line and present my medical problem. probably Zamtel would be good for such service
jamakudi
March 18, 2014 at 8:43 pm
The economy is headed for trouble; just as HH warned sata whom he insulted in return.
PF Out! Moyes Out!
March 18, 2014 at 9:18 pm
Do say u were not warned; Chanda chimba said it all!
icinshikululwa
March 18, 2014 at 10:36 pm
Kwacha will go Kwacha will go down iwe!; depending on time and stuations; this is not Landan, and kwacha is no pound, this is no America and kwacha is not dolla. This is Zambia, real Africa where we depend on foreign sasstainance. Stop miss leading pipo with your outdated politcs; yu under five chaps. What ecconomy can Hakahinde build? This man who could even fail to unite pipo in his oppoztoin. Selela uko wileka tulande ifingi.!!
kopala
March 19, 2014 at 2:56 pm
knock knock..any brains in there???? i wonder.
Prakash
March 19, 2014 at 10:06 pm
Please come in, Empty Tin will see you now. He has just come back from Landan.
jamakudi
March 18, 2014 at 11:12 pm
The economy is on a stretcher going towards intensive care wing .
Mwewa
March 18, 2014 at 11:17 pm
@icinkuluwa ulimbwa sana ninshi ulota fye HH.. Waba mafi
Mwewa
March 18, 2014 at 11:21 pm
@icishikunyonyo, go back to Congo..
UMWAUME
March 18, 2014 at 11:44 pm
@MWEWA,
You are very abusive and backwards.I wonder if you are born of a woman.Discuss issues and not your rubbish.
ChiKA
March 19, 2014 at 1:14 am
This clearly shows that investors have lost confidence in government. The economy is quite sensitive bane, any wrong policy guideline like public order act and/or with-holding of the constitution really impacts negatively on the economy. PF has failed lamentably and instead of correcting things, they are busy justifying their wrongs.
kopala
March 19, 2014 at 2:57 pm
correct!!
Mwewa
March 19, 2014 at 7:25 am
@umwaume i didn’t know u r also a hired monkey… Leave Zambia to Zambians u have your own Congo am told theres some peace now
henry
March 19, 2014 at 7:40 am
there is nothing strange about that.
1USD= 6.280 kwacha
1USD= 10 ZAR ( South African Rand)
between Zambia and South Africa, which country has the strongest economy? It is south Africa.
So the waekening of Zambian Kwacha should not be politicized and should not be a suprise
diamond platinum
March 19, 2014 at 8:05 am
I would like to know what our president is saying about this situation,the time he was in opposition he would have said all sorts of words.now its is time but doing nothing from something.Mr sata you have failed to rule this country,just tell us the day of bye election.ukulanda kwalya nguka
katwishi mukwai
March 19, 2014 at 8:17 am
Henry,put back am zero kuli kwacha ,that is the real value of the kwacha.
pompwe
March 19, 2014 at 9:13 am
we need general elections to resuscitate our kwacha..
Air Mukwai_
March 19, 2014 at 9:21 am
Minister of finance must step down. His joe is not only based on reading prepared notes and handouts. There’s more to it.
jessy j
March 19, 2014 at 9:46 am
Magande worked with mwanawasa when the dollar came to 2.800,I think its high time ba sata consulted magande, pantu( things are bad bashi mwana)
Trixy
March 19, 2014 at 11:08 am
Magande must just be given the job of Finance Minister. PERIOD.
zedman
March 19, 2014 at 2:20 pm
what about impeaching him? or mass protests,they always seem to work
Trixy
March 19, 2014 at 2:25 pm
Wish that can happen. Honestly things are getting out of hand!!
mwaba mwamba
March 19, 2014 at 10:26 am
Icinshikululwa be sensible. the driver is PF, tell them to pull up and stabilise the Kwacha. we cant praise when they are not performing corerectly. be fair
icinshikululwa
March 19, 2014 at 10:40 am
This is my country my brother, my m
Mother Land; what have I taken from yu for yu to misstaken me to a Congorie? Have I insulted yo father or yo mother? However, it is a fact that no one will ever tell us about HH and UPeND, we all know what they are capabble of; one can try them here in Zambia to be inrusted with the govern responsbility of MAMA Zambia. Go on PF, go on Micheal; this Our kwacha will rise again!
icinshikululya
March 19, 2014 at 10:44 am
No one would evre intrust HH and UPeND with our governing responsbility of our coutry zambia.
babankuru
March 19, 2014 at 10:57 am
All the birds have wings but not every bird can fly. suprise because these birds which can fly or not live happly. I think we are better than birds
yobo 13,13
March 19, 2014 at 11:11 am
Birds of the same wings fly together.our president is so close to mugabe what do you expect,look at zim currency.vote wisely poor zambians
Trixy
March 19, 2014 at 11:11 am
I wish ichishikululwa, Umwaume and all the other PF cadres can just shut up for once. How can a normal person support this? Honestly the economy of this country leaves much to be desired and people are still barking about how good PF and Ukwa are doing. You twits lease learn to distinguish sense from nonsence. What kind of dullness is this?
komboni radio
March 19, 2014 at 12:03 pm
Naga iwe chi Trixy ni sikulu bwanji muna punzila,why are you busy condemning those in support of PF? Agree with your UPeND and I will support my NAREP period..kupusa malabishi yako!
mr nice
March 19, 2014 at 11:55 am
@trixy leave these fools,its inside bone dullness,yeah!
Village Chicken
March 19, 2014 at 3:19 pm
And when all this is happening Sata finds it suitable to hide on facebook. Chikwanda is nowhere to be seen or heard and those economic mercenaries at BOZ are ndwii…
Support your failing Sata who dines and dances with Mugabe ( certified economic failure) BUT let us support our Zambia. Zambia has more substance than Sata who cannot think better than a party cadre. Reminder, two id1iots are in jail in Egypt but they never thought that day would come..
icinshikululwa
March 19, 2014 at 4:02 pm
Michael went to house#1 thru lawful electionz, the one you call unleaned. But can you imagin, you are perving yo way thru unlawful idearz, and bcoz of this, you are killing yo once beaultful party. Continu and you will pay for this. Come; 2016, 2021, 2026…; yu will learn a leasson for yo life. No one will ever allow yu to go to state house thru nosense, like the way you brought HH into the leadership of yo party. Mark!!!
Trixy
March 20, 2014 at 10:28 am
Iwe Icishunyonyo….or whatever you are called. It is your Ukwa that went to state house through nonsence (lies). What is HH doing that is unlawful? You are busy insulting and intimidating the guy left, right and centre and you expect him to just sit at akimbo? Who the hell do you think you are? What makes you think you are more Zambian than others? You are very foolish wamvela.
Possible
March 20, 2014 at 11:05 am
THE MINES ARE PLAYING DIRTY WITH THE GOVT.
ITS ONLY AFTER THE INTRODUCTION OF THE SI-55 WE ARE NOTICING THESE EFFECTS. NO PROPER DECLARATION OF EXPORT FUNDS.
REVOKE THE SI-55 AND SEE THE CHANGE. WE NEED A FREE FLOW CURRENCY IN THIS FREE FLOW MARKET.
MAN OF ACTION MUST ACT NOW!!!