APPRECIATION OF THE KWACHA MAY BE SHORT LIVED- ECONOMIST CHISANGA
APPRECIATION OF THE KWACHA MAY BE SHORT LIVED- ECONOMIST CHISANGA
By: Sun FM TV Reporter
Economist Kelvin Chisanga has advised Zambian businesses and individuals to exercise caution in response to the recent appreciation of the kwacha, warning against a hasty increase in import activity.
In an interview, Mr Chisanga explained that Zambia’s exchange rate remains highly susceptible to seasonal inflows, fluctuations in international commodity prices, and shifts in investor sentiment.
He pointed out that the current strength of the kwacha may not necessarily reflect sustainable macroeconomic fundamentals.
Mr Chisanga cautioned that overreliance on the prevailing exchange rate could have adverse consequences.
He noted that if the kwacha weakens again, businesses may incur higher costs when settling obligations with foreign suppliers, ultimately affecting profitability.
The economist emphasized the importance of determining whether the currency’s appreciation is underpinned by long-term structural improvements or driven by short-term factors such as seasonal agricultural inflows or tax receipts.
To mitigate risk, Mr Chisanga urged businesses to adopt prudent and flexible procurement strategies.
These, he said, may include the use of forward exchange contracts and refraining from overstocking based solely on short-term currency movements.
