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Secretary to the Treasury Fredson Yamba has said despite the overall depreciation recorded over the last few weeks, the Kwacha has generally demonstrated its overall stability and the resilience of the Zambian economy, by remaining within acceptable margins of variation and fluctuation.

He affirmed that under similar circumstances, currencies of less resilient economies would have crumbled to shreds.

Over the last few weeks, pockets of pressure on the local currency have continued due to the stronger international performance of the dollar; poor copper price outlook on world markets; and, speculative private sector decision-making associated with projection uncertainties due to the upcoming presidential elections.

“Like other commodities, the price of copper has continued its retreat thereby lowering our enthusiasm on balance of payment expectations. Clarity in the national policy direction after the Presidential By-Elections will certainly help the domestic economy and the Kwacha in particular, to rebound and attain stability levels against major foreign currencies, sooner than later,” said Mr. Yamba.

Overview of Domestic & International Economic Affairs: As at 13th January, 2015, oil and copper prices continued to stagger. The exchange rate of the Kwacha against the dollar also depreciated from K6.49 recorded on 6th January to K6.55 yesterday. During the period under review, the Bank of Zambia has been prudent by making interventions to smoothen out volatility in the forex market.

Meanwhile, the LUSE all-share index increased by a margin of 0.18 percent during the week, closing at 6,151.30 on Wednesday 13th January, 2015 compared to 6,121.26 on Tuesday, 6th January, 2015. Price movements were recorded on CEC and Lafarge shares.

Copper Prices: Copper prices declined by 4.5 percent to US$5,915.00 (US cents 2.64 per pound) on Tuesday 13th January, 2015, from US$ 6,191.00 (US cents 2.76 per pound) registered on Tuesday, 6th January, 2015. This is the weakest in over five years and is largely attributed to weak industrial activity in China and weaker global economic growth, coupled with an increase in global copper supply.

The 3-months settlement price on the London Metal Exchange [LME] also decreased by 4.6 percent to US$ 5840.00 per ton (US cents 2.60 per pound) from US$ 6,121.00 per ton (US cents 2.72/pound) recorded on Tuesday, 6th January, 2015.

On the LME, copper stocks increased by 7.0 percent to 191, 300 MT on Tuesday, 13th January, 2015, from 178, 780 MT on Tuesday 6th January, 2015.

Crude Oil: Crude oil prices continued to fall, and dropped by 12.3 percent to US$ 46.58 per barrel on Tuesday, 13th January, 2015 from US$.53.11 per barrel registered on 6th January, 2015. The continued fall was mainly on account of global oversupply and weak oil demand. The Treasury will continue to monitor the trend and to ensure that benefits are passed on to consumers in Zambia.

GLOBAL EVENTS: Latest information shows that China’s trade data for December was above expectations with exports up by 9.7% while imports fell by 2.3% from a year earlier; reflecting the impact of the continuing plunge in crude oil prices. In Europe, the Purchasing Managers Index [PMI] was 50.8 in December, 2014 from 501.1 in November, 2014. This is the highest gain in five months. The USA manufacturing PMI was at 53.9 in December from 54.8 in November, 2014. In the same period, inflation drops were recorded in the United Kingdom and Germany, while a number of other Euro-Zone Countries, including Spain and Italy, have already fallen into deflation.

Mr. Yamba said these activities are important to monitor as they affect Zambia as well, and he asserted that the positive developments in China and the USA, if sustained, will have the impact of raising demand for Zambian exports, particularly copper and copper related products.

“On the other hand, sluggish economic performance in the USA, China and Europe has adverse impacts on global growth as it lowers opportunities for developing countries through channels such as trade and Foreign Direct Investment [FDI] inflows,” said the Secretary to the Treasury, adding that, a fall in commodity prices affects earnings and exchange rates.

The Treasury will continue to issue briefs to ensure that credible and accurate information is shared with the public, both locally and in the international arena.