Tue, 03 Jan 2017 08:13:38 +0000
By Chikumbi Katebe
THE ZAMBIAN Kwacha has been described as the best performing currency and assets in Best Spot Returns in Africa, and among the six best performing in the world in 2016.
This is contained in a study published by Bloomberg, a global research and information company which placed Zambia sixth with Russia, Brazil, Palladium, Iceland and Silver as 1st, 2nd, 3rd, 4th and 5th respectively.
And Bloomberg has placed Nigeria’s Naira as the worst performing currency of 2016 among more than 150 currencies worldwide.
Bloomberg explained that the Naira has depreciated 37 percent against the US dollar since the central bank abandoned its peg on June 20, while bond yields have jumped to more than 20 percent.
The naira strengthened 4.6 percent to 315 per dollar on Tuesday after falling to a record 350.25 on Aug. 19.
Bloomberg explained that the Zambian currency has continued to trend among the best performers in the world after climbing 19.9 percent in the first quarter of 2016.
The currency enjoyed the positive international trade with China that recorded a massive upto 11.5 percent in imports during 2016, which influenced foreign investors to convert theory foreign exchange, US dollars, into the local currency following its gain on the international money market.
The removal of subsidies on fuel and electricity tariffs also contributed to the strengthening of the Kwacha as the Central Bank was able to increase reserves in Government securities.
And former Finance Minister Katele Kalumba has hailed the Zambian Government for the stringent measures in tightening liquidity in the economy which contributed to the Kwacha being the best performing currency ahead of South Africa, Namibia and Swaziland.
Dr Kalumba said Zambia was rubbing shoulders with Russia, Brazil and Iceland among the world’s top leading currencies and economies following President Edgar Lungu’s policies which encouraged capital investments and strict monitoring systems by the BoZ.
He said it was necessary for President Lungu and his Government to introduce strict measures such as removal of fuel and electricity subsidies to increase reserves and control liquidity to reduce movement of cash in the economy, and the decision of opening up the construction industry with increased capital investments in real estate and road infrastructure.
Dr Kalumba said all this was as a result of Government’s cautious steps in implementing policy and management factors in the monitoring of securities through the central bank.
The Kwacha now trends among the world’s strongest currencies as revealed by Bloomberg, an international online media publication that has placed Russia’s Ruble at the helm of the world’s strongest currencies followed by Brazil and Iceland.
Bloomberg says Russia, Brazil and Iceland were the only countries leading Zambia which is followed by South Africa, Lesotho, Namibia and Swaziland with the world’s top ten leading national currencies in that order.
Dr Kalumba said the monitoring conditions put in place through the central bank’s intervention on securities control and the Ministry of Finance policies have helped maintain the currency strength against others on the international market.
“Restrictions are on the movement of money but there are no restrictions for goods and services and consumables which make capital goods available, so it is just the means which should improve, and this with the emphasis on improving employment.
“And of course the Government had taken a cautious approach in the 2017 budget by putting measures which should help attain a single digit inflation to be at less than 9 percent of domestic borrowing, targeted at less than 3 percent of the Gross Domestic Product,” he said.
Dr Kalumba has however cautioned the Government against venturing into unbudgeted for constitutional reforms which were known to gobble huge sums of money from the economy.
He said Zambia as a nation has wasted too much money in a long winding process of amending the Republican Constitution which has not been conclusive.
“According to the best research done by Chicago University Constitution Group the life span of a global constitution since the American constitution was founded only lasts 17 years.
“Considering the average of 10 years in Africa, the lifespan of a constitution is decreasing before they go back for amendment,” he said.
