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The Kwacha’s positive performance must translate into higher living standards by lowering the prices of goods and services across the country, says Policy Monitoring and Research Centre (PMRC).
The local currency is trading around K17.275/17.325 against the United States Dollar.
PMRC Executive Director, Sydney Mwamba, stressed the need to capitalise on the Kwacha appreciation to ensure sustainability and the positive trickle-down effect on the Zambia’s standard of living.
“There are a number of short-term drivers that have contributed to the kwacha’s appreciation, which must be capitalized on to ensure sustainability and the positive trickle-down effect of the currency appreciation on the country’s standard of living.
“It is critical that the kwacha’s positive performance translate into higher living standards by lowering the prices of goods and services across the country,” Mwamba said in a statement on Friday.
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He pointed out that the Bank of Zambia’s release of US$443.5 million to stabilise the currency in January, coupled with an increase in the reserve ratio on commercial banks’ deposit liabilities by 2.5 percent points to 11.5 percent, were producing much-needed results by curbing Kwacha volatility.
He said increased copper prices on the London metal exchange was also another driving force to the appreciation of the kwacha, which surged from around US$8049.86 per tonne in November 2022 to highs of US$9037.95 per tonne in January and trading at US$9030.10 per tonne as of April 17, 2023.
Lastly, Mwamba said, positive reports from the International Monetary Fund (IMF) spring meetings on Zambia’s request for debt restructuring is the most important factor in kwacha appreciation.
“This is due to the positive sentiments associated with the credit committee’s agreement that will give guarantees to Zambia as well as provide further relief in terms of supporting the government to restructure its debt.
“It is critical that these sentiments are actualised as soon as possible, as debt restructuring remains critical in providing a long-term solution to the exchange rate volatility that the country periodically experiences as a result of its trade imbalance. This will provide sustainability to the current appreciation of the kwacha over the long term,” he said.
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