NANCY MWAPE, Lusaka
THE Bank of Zambia (BoZ) says the Kwacha has gained against the US dollar on the back of improved supply of foreign exchange and higher copper prices.
Briefing journalists, BoZ governor Denny Kalyalya said the exchange rate of the Kwacha against the US dollar has remained relatively stable with a bias towards appreciation in the first quarter of the year.
“The Kwacha appreciated by 2.5 percent against the US dollar to K9.6016, supported largely by improved supply of foreign exchange and higher copper prices,”
“Copper prices are looking up with strong demand from China supported by its fiscal policy stimulus measures. Copper prices rose due to improved activities in the Chinese construction sector and anticipated US fiscal policy easing,” he said.
And Dr Kalyalya notes that demand for government securities has continued to increase in the first quarter of the year, on account of easing liquidity, with higher participation by local institutional investors.
He added that participation by non-resident investors also increased.
Dr Kalyalya said the holding of government securities by non-residents increased by 4.9 percent to K6.9 billion in the first quarter, representing 18.6 percent of the total stock.
“Yields rates on both treasury bills and Government bonds continued to decline, reflecting increased demand. The weighted average treasury bills and government bonds yield rates dropped to 16.6 percent and 20.4 percent in March 2017 from 24.2 percent and 25 percent in December 2016, respectively,” he said.
He also noted that money supply during the first quarter grew by 5.1 percent up from a growth rate of 0.8 percent in quarter four of last year.
The growth is attributed to a rise in bank lending to Government through treasury bills and bonds.
Meanwhile, the Bank of Zambia says domestic economic activity during the first quarter of the year was low.
Dr Kalyalya said available real sector data indicates that economic activity generally declined.
“Seasonal factors affected production in some sector such as mining, construction, manufacturing and agriculture.
Most sectors continued to experience limited access to credit due to bank’s preference for government securities,” he said.