Social Economust Kelvin Chisanga on “Kwacha swings to the south, continues to bleed inflationary effects!”

By Kelvin Chisanga 

In the Zambian case, normally this period towards the end of each calendar year around this same time, it however looks like a traditional system that Zambia faces with the US Dollars, as it usually comes up with such an heavy pick up demands winding up the financial year with rapid movements seen in the forex market.

As the case is, inflation rate picks up strongly from the exchange rate channels due to Zambia’s alignment of imports which brings about fractions of inflationary effects being imported as well, and on the other side the poorly arranged country’s manufacturing base is equally failing us to a point that we cannot help counterbalance actual output landing cost factors.

So, the current demand appetite is mainly attributed to the structural economic happenings which take place with this patterns despite interventions from various stakeholders, currently the local unit (currency) is suffering from varying complex factors ranging from the participations of corporate buyers to importers on retail side, with contradictions observed in policy shifts as instituted by both the central government and central bank, which have earmarked to take effect come January next financial year.

Policy stimulations as planned in next year’s national budget, have equally since started to gravitate on this desire for Dollar demand, as there is a strong drive to pull out Dollars on the local market in fear of Bank of Zambia’s (BOZ’s) deliberations to halt Dollar transactions in the domestic market, annual purchases of charismas goodies set for this season, is also acting up on the card as a strong propensity to this loss, a case that might be regarded as a negative complimentary element standing on the firm grounds among other factors on the table.

The biggest elephant in the room is the importation of both energy and agriculture commodities, as we are both importing fossil oil (fuel) and the electricity which have given out to such risk exposure in the forex market fundamentals leading to this huge imbalance on local forex trade.

Lastly, on the agriculture side, we are still importing Farmer Input Support Programme  (FISP inputs) as well as importing some essential medicines. This period of the time the importer drive demand is standing quite very strong amidst strong Dollar cycle since after Republican aspirant US Donald Trump’s electoral victory over Vice President Kamala Harris of the Democratic Party.