.Mr. Sata
By KAIKO NAMUSA –
PRESIDENT Michael Sata says the recent depreciation in the exchange rate is due to a combination of domestic and international market developments.
He said in a market-based economy such as Zambia’s, the exchange rate, like any other price, was fundamentally affected by supply and demand of foreign exchange in the market.
Mr Sata said on the international front, the United States Dollar had broadly strengthened against other currencies following the Federal Reserve Bank’s decision to reduce the amount of liquidity it injected into the economy through its monetary stimulus programme commonly referred to as Quantitative Easing.
“Consequently, emerging market currencies have generally depreciated against the US Dollar. For instance, since the beginning of the year, the Ghanaian Cedi and South African Rand have depreciated by 5.5 per cent and 4.7 per cent against the US Dollar, respectively,” Mr Sata said.
He said on his Facebook page yesterday that in comparison, the Kwacha had weakened by 4.3 per cent against the US Dollar over the same period.
The President said since the beginning of the year, the Kwacha had in fact appreciated by 0.5 per cent against the South African Rand to trade at K0.52 to a Rand as at February 20, 2014.
He said economic activity had generally been steady in the recent past and that in order to support this, there had been increased demand for capital imports, which had increased demand for foreign exchange.
The President assured that Government was closely monitoring developments in the foreign exchange market and had in this regard tightened monetary policy consistent with the attainment of the inflation target of 6.5 per cent for 2014.
He said the country’s non-traditional exports had been on the rise and increased by 27 per cent to US$3.6 billion as at December last year.
“I, therefore, want to encourage the private sector to seize the opportunities in the export sector and expand their productive capacities as exports become relatively competitive on the world markets,” he said.
