Kwacha responds to increase in rending rates by depreciating heavily

Kwacha responds to increase in rending rates by depreciating heavily

investThe PF Kwacha has responded to the decision by the Bank of Zambia to increase lending rates by depreciating heavily. As of today at Investrust Bank  at 15:00hrs, One US dollar was selling at K13, 25. A British Pound was selling at K20:14. A economist told the Watchdog that, with a rise in interest rates, the anticipation was that the action by BOZ would lead to capital inflows (Mundel-Flemming Model). However, with the PF in government, everything seem to be refusing to work in their favour.

The PF president is called ‘chagwa’ meaning it has fallen. Some superstitious people now believe that Chagwa is cursed that is why everything in Zambia is falling apart.

Two days ago, the Bank of Zambia raised its benchmark lending rate by a record 3 percentage points to rein in inflation after the Kwacha lost almost half its value this year.

The central bank increased the policy rate to 15.5 percent from 12.5 percent, Governor Denny Kalyalya told reporters in Lusaka, the capital, on Tuesday. The median estimate of three economists surveyed by Bloomberg was 14 percent.

“We want to promote growth but, for now, inflation for us is a bigger evil going forward,’’ Kalyalya said in an interview after the announcement’

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