AN assurance on Zambia’s economic direction by President Lungu, coupled with interventions by the central bank, has impacted positively on the Kwacha, resulting in the local unit trading between K7.80 and K10.50 against the United States dollar yesterday.
With the price of copper, Zambia’s economic backbone, beginning to rise, it is expected that the Kwacha’s recovery will continue.
A survey conducted in Bureaux de Change at mid-morning yesterday revealed that the Kwacha, which has been vulnerable in the recent past months, had recouped the losses to gain by over 6 percent, its highest in two months.
At C&A Bureau de Change, the Kwacha was pegged at K7.80 and K7.90 on bid and offer, respectively, while FX Bureau pegged the local unit at K9.91 and K10.09.
The Kwacha/dollar rate stood at K10.30 and K10.50 at Golden Coin Bureau.
The Bank of Zambia rate stood at K9.21 and K9.23 recorded at 9:30 hours but closed around K10.35 and K10.37 on bid and offer, respectively.
Zanaco Bank says the Kwacha climbed to its strongest against the dollar in almost two months on Thursday as demand for the local currency dominated trade.
“By 15:30 hours, commercial banks quoted the Kwacha at K10.90/10.92, compared to Wednesday’s close of K11.55/11.57 where it opened on the day.
“The currency traded at levels last seen in September driven by weak appetite for the dollar in a market thin of Kwacha,” the bank says in its daily treasury issued yesterday.
On Thursday, President Lungu unveiled a broad-packaged plan to revive the economy, with an emphasis on tight fiscal and monetary management.
Commenting on the development, financial market analyst Maambo Hamaundu said President Lungu’s assurance on the economic situation during his maiden press conference on Thursday allayed fears by some sectors of society on the economic direction thus impacting positively on the local unit.
“Bank of Zambia’s continued intervention and the presidential address during the press conference instilled confidence in the market and saw the Kwacha respond positively,” he said in an interview.
Mr Hamaundu said the presidential address also minimised market speculation, which has in the past contributed to the depreciation of the local unit.
He, however, said the currency will continue to be driven by the market forces of demand and supply.
Meanwhile, the Wall Street Journal reports that copper prices hit an eight-day high in London on Thursday, rebounding from recent multiyear lows on reports that China would start buying industrial metals to stock up its strategic reserves.
The London Metal Exchange’s three-month copper contract was up 2.3 percent at $4,656 a metric tonne in midmorning European trade, having hit an intra-day high of $4,741 a tonne.
President’s pronouncements at a glance:
• Investors assured that their investments are safe
• Curtail foreign and local trips by ministers and government officials
• No quoting of prices in dollar; law to be put in place.
• No new infrastructure projects will be signed; ongoing projects to be completed
• No more creation of missions abroad
• Establishment of national airline deferred
• 10,000 jobs to be created on Copperbelt
• Implement cost-reflective energy/power tariffs
• Speedy implementation of alternative sources of energy
• Itezhi tezhi to offload 100 megawatts of power next year
• E-voucher system in agriculture to go nationwide next year
• Zambia Public Procurement Authority to publish market prices of high value items to stop cartels
• ZRA to strengthen loopholes in tax collection, prosecute defaulters
• No work will be done outside budgetary allocation
• FRA to offload maize to millers, prices to drop to K65 per 50Kg bag of mealie-meal
• 20 percent of contracts on the Copperbelt to be awarded to local contractors
• Establishment of co-operative farming to absorb miners being retrenched