The opposition National Restoration Party (NAREP) says the recent rapid depreciation of the local currency, the kwacha, against the major world currencies is both shocking and worrying.
NAREP president Elias Chipimo said it is shocking because of the speed at which the kwacha is losing value and worrying because being a highly import-dependent economy, every time the kwacha loses this amount of value, the cost of goods and services goes up significantly and almost immediately.
“It may only be a matter of time before we see increases in fuel prices, transportation charges, commodities, foodstuffs and basic services,” the opposition leader said at a press briefing Thursday.
Chipimo was concerned that the people who have been battered by the storms of subsidy withdrawals and will now have to face yet another storm of price rises due partly to what he said was the haphazard manner in which the country is being governed.
“No one doubts the negative effect of declining copper prices on the international markets. Nor could anyone have prevented the strengthening of the US dollar and global reactions triggered by events in the Ukraine. But these factors do not excuse us from being the one country that has the worst levels of currency depreciation in the world after possibly only Ukraine,” Chipimo stated.
The Kwacha this month hit its lowest point and is currently trading at K6.3750 per US dollar. Since 2013, the kwacha reportedly lost more than 20 percent of its value, making it one of the biggest loser among the African currencies.
The Bank of Zambia recently announced that it has so far sold US$178 million to the market, in order to support the relatively low supply of foreign exchange and moderate volatility in the foreign exchange market.
According to the central bank, since the beginning of 2014, the exchange rate of the Kwacha against most of its major trade partner currencies has exhibited a depreciation trend and as at 10 March 2014, the Kwacha had depreciated against the US dollar by 7.8 percent to trade at an average of K5.9406 per US Dollar from an average of K5.5126 per US dollar at the close of December 2013.
Further, the local currency lost against the British pound and Euro by 8.5 percent and 8.7 percent, respectively.