A financial expert in Solwezi Dawson Kafwaya has observed that the Zambian kwacha has lost value against the US dollar due to demand of the later.
Mr. Kafwaya said in an interview that the depreciation of the Kwacha has been affected by external borrowing because when paying back the debt, it is being done in dollars hence having demand on the market.
He said due to high demand of the US dollar, it has resulted into a lot of kwacha on the market.
“In short, the demand for the other currency is more than the demand for our kwacha and that is why we are seeing its continues depreciation against major currencies, “said Mr. Kafwaya.
He also mentioned that the trend is likely to continue due to the state of the economy.
He has however proposed the need to increase exports to neighboring countries in order to gain more forex.
He said open international markets will help increase exports which will result into a strong local currency.
“And in long run, you will see the dollar going down. It will not down in a day but it will be a gradual thing provided we increase on the exports,” he said.
On the increased Monetary Policy Rate by the Bank of Zambia, Mr. Kafwaya said the move is a long term measure aimed at reducing borrowing in order to reduce the inflation rate.
Mr. Kafwaya said there has been too much borrowing by mostly those in formal employment which government is trying to discourage by increasing the MPR.
“So, by increasing the MPR, government is now discouraging people from borrowing because the interest rate will go up,” he said.
He said for those that have already borrowed, either the repayment period is likely to increase or monthly payment increased depending on the agreements with the commercial financial institution they borrowed from.
