Over valued Kwacha a danger to economy

Wed, 01 Mar 2017 13:23:24 +0000

By MAILESI BANDA

AN overvalued exchange rate is a threat to the economic growth of a country as it affects the export of goods which become more expensive and fail to compete on the international market, Economic Association of Zambia president Crispin Mpuka has said.

Dr. Mpuka said what was important in the exchange rate was the stability of the currency.

Reacting to the Cavmont Bank’s daily market report for Friday which indicated that the local currency had continued to gain ground against the United States dollar in the past few weeks, he said this should not excite people as it had some economic effects if it continued.

“An overvalued exchange rate has its own consequences as much as we celebrate as consumers we need to be wary of the other side bearing in mind that exports are an important part of the economy,’’ he said.

He said the best way an economy could attain stability would be if the exchange rates were stable. He explained that the country produced a number of goods for export and which could be expensive if the exchange rate was overvalued, adding that this would affect the manufacturing, agriculture and tourism sectors.

He said an overvalued exchange rate would make exports more expensive on the international market and make it hard for them to compete with goods from other countries.

He said there was need to have efforts directed at ensuring that the Kwacha remained stable on the exchange market for the country to have sustainable economic growth.