Zambia’s president Edward Lungu has commended the country’s central bank for the measures it has put in place to handle the exchange rate turbulence that has helped the Kwacha recover marginally to the dollar.
In a statement, the president expressed full confidence in the current leadership of of the central bank .
The bank of Zambia raised interest rates by 300 basis points to 15.5 percent in November in a bid to curb inflationary pressures, but left them on hold in February, citing concerns about slowing growth.
It hasn't appreciated that much for people to get so excited about it.
Following the rate hike, the Kwacha recouped some losses but came under renewed pressure after credit ratings agency Moody’s earlier this week, downgraded Zambia’s rating to a B3 with a negative outlook.
Zambia’s deputy finance minister said that the fall of the Kwacha was due to to dollar demand from the government’s import of medical supplies.
But Lusaka residents say they are yet to feel the gains of a strong currency
“It hasn’t appreciated that much for people to get so excited about it,” said Sera Chiwala, a Lusaka resident.
Zambia’s government in the past has criticised politicians and analysts who have dismissed the Kwacha’s recovery as a political gimmick ahead of general elections in August.
“As far as sustaining the exchange rate, there is nothing that I see or nothing that I have heard that would make me believe that this is going to be a sustained exchange rate, because we are still importing more than we are exporting,” said Situmbeko Musokotwane Zambia’s former finance minister.
Zambia is Africa’s second-biggest copper producer, and is facing a myriad of challenges, from an electricity shortage to depreciating copper prices that have threatened output on the mining industry, jobs and economic growth.
Despite these challengers, investment in the mining sector from global commodities trader Glencore, which recently announced that it plans to invest over $1.1 billion in Zambia to sink three copper mine shafts, is a sign of renewed confidence in the country’s mining industry.