THE Bank of Zambia plans to intervene to bolster the poorly performing kwacha, says central bank governor Dr Michael Gondwe. Africas biggest copper producing nations currency has maintained a bearish trajectory for a larger part of this month, with experts saying it was racing towards K5.60 against the US dollar. Policy makers have struggled to halt the kwachas slide after the downgrading of Zambias credit rating to B-plus and the current unrest and stand-off between Konkola Copper Mines and the government saw the local foreign exchange market experience an increasing appetite for foreign currency. The kwacha, which traded at K5.28 and K5.35 on October 25 before Fitch downgrade, had depreciated to K5.55 and K5.57 as of Tuesday this week. Dr Gondwe said the kwachas slide was not the worst as there were other currencies, like Indias Rupee, which had fallen by 16 per cent to the dollar. But, of course, we are... looking at mopping up liquidity in the economy and a lot other measures, Dr Gondwe told journalists about the central banks intervention on the kwachas poor performance. He said the kwachas slide was mainly due to a lack of foreign-currency liquidity in the market. By mid-morning yesterday, commercial banks quoted the kwacha at K5.44 and K5.55, the highest this week. On Wednesday, the kwacha ended the day 1.08 per cent stronger than Tuesdays close of K5.55/57 per dollar. Standard Chartered Bank and Barclays Bank said the recent upbeat of the currency was on the back of increased dollar inflows from large corporates and offshore players who are meeting their tax and other obligations. Meanwhile, prices for copper delivery in three months on the London Metal Exchange dropped as much as 0.7 per cent to US$6,950 a metric tonne and traded at US $6,954.75 in Tokyo yesterday. The red metal has fallen 12 per cent this year.
Posted on: Fri, 22 Nov 2013 16:18:00 +0000
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