By JAMES KUNDA –
TRADE between Zambia and South Africa will no longer be exposed to adverse effects of currency fluctuations following the quoting of the Kwacha on the Johannesburg Stock Exchange (JSE).
Lusaka Stock Exchange (LuSE) chief executive officer Brian Tembo said in an interview that the quoting of the Kwacha on JSE through an instrument known as the Currency Futures (CF) contract, would hedge against currency fluctuations ensuring stability in trade between the two countries.
JSE launched the CF’s contract, an instrument that investors, travellers, importers and exporters could use to hedge themselves against fluctuations in the exchange rate, quoting three currencies namely; Kenyan Shilling, Nigerian Naira and Zambian Kwacha.
Mr Tembo said the quoting of the Kwacha on JSE would mitigate the currency mismatch with the South African Rand and this also applied for the Shilling-Rand and Naira-Rand relationship.
“There has been a lot of trading going on between Zambia and South Africa, actually, trade between the two countries has grown by 400 per cent in the last 10 years, this is why there was need for a cushion against currency fluctuations,” he said.
Mr Tembo said the CF’s instrument would guarantee stability in the exchange rate thereby maintaining stable prices of goods and services.
Meanwhile, Private Sector Development Association president Yusuf Dodia observed in a separate interview that there were little tangible benefits for the economy out of the Kwacha’s presence on JSE.
Mr Dodia said growing any economy depended largely on policy formulation and reducing the cost of doing business while creating an attractive destination for Foreign Direct Investment .