Kwacha is on course to regaining its stability -Yamba

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Secretary to the Treasury Fredson Yamba says the Kwacha is on course to regaining its stability and resilience.

 

Mr Yamba disclosed in a statement issued to ZANIS that the Kwacha has posted a 1.3% gain week-on-week performance.

 

He hinted that in the past few weeks there has been a pocket of pressure on the local currency due to the strong international performance of the dollar, and poor copper price outlook on the world market.

 

“With the presidential by-elections behind us, we hope to see the speculative tendencies of the private sector fizzle; and that’s positive for the currency market,” said Mr. Yamba.

 

The Secretary to the Treasury revealed that the increased supply of the US dollar on the market contributed to the Kwacha to appreciate against the US dollar by 1.33 %.

 

The Bank of Zambia has continued to be watchful and to make interventions aimed at smoothing out the volatility in the forex market.

 

Meanwhile, the Ministry of Finance is on high alert in monitoring global economic events as they affect Zambia as well.

 

The Ministry of Finance noted that on the global front, most commodity prices have continued to be fragile as the global economy weakened.

 

Like other commodities, the price of copper has continued to relapse.

 

The price of Copper on the London Metal Exchange has declined by 2.61 % to US dollar 5,760.50 per MT (US cents 2.56 per pound) from US$5,915.00 (US cents 2.64 per pound) registered week-on-week.

 

 The continued decline in copper prices is largely attributed to the weak demand for the metal in the Chinese and European markets.

 

And the price of crude oil has remained below 50 US dollars per barrel due to the global oversupply, compounded by the resistance of OPEC to calls to reduce supply.

 

According to the statement positive developments in China and the USA, when sustained, have the impact of raising demand for Zambian exports for copper and copper related products.

 

Latest information shows that Real GDP for the USA for the fourth quarter was positive at 6% compared to 5% and 4.6% in the 3rd and 2nd Quarter of 2014, respectively.

 

On account of a strengthening job market and lower fuel costs, consumer sentiment in the USA surged to an 11-Year High of 98.2 from 93.6 in December, 2014.

 

Meanwhile, China’s economic growth slowed down to its weakest in 24 years at 7.4 % in 2014 compared to 7.7 % in 2013.

 

Investment in China’s property market slowed down to a five year low of 10.5 % in 2014 compared to 19.8 % in 2013.

 

Further, China’s Central Bank has granted US$ 8.1 billion of relending quotas as support for businesses and the agricultural industry, and a government commission approved a plan to build urban rail networks.

 

The building of urban networks project has kept the outlook on copper prices positive, as the project will enhance demand for copper products.

 

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