In the labyrinth of currency scarcity where Zambia grapples with foreign exchange supply bottlenecks outwitted by ballooning demand, the trading environment in the copper producer remains challenging. Zambia’s performance on the access to foreign exchange pillar of the AFMIndex 2020 scored 60 out of 100 weighed by falling reserves leaving the central bank with little ammunition to sell dollars on the open markets for price stability purposes.
Speaking at the AFMIndex launch in Lusaka, Absa Zambia Plc Director Global Markets Stanley Tamele said trading has been challenging in the current environment.
“Apart from the supply concerns which are systematic across the banking sector, there is demand on the other hand which has grown over the years with key driving sectors being agriculture and energy, Tamele said.
“With the negative sentiment around Zambia, more and more players are holding to dollars as a safer haven store adding to the demand side,” he said.
Much as dialogue has continued through the Banker Association of Zambia, ACI and other regulators such as Bank of Zambia it has still become seemingly hard to convince clients that the market lacks liquidity.
“We have however picked a leaf from market peers such as Mozambique with regards how they navigated such turbulence post default. The market still offers hedging products such as vanilla swaps and forward exchange contracts in the interim. We remain close to our clients in these times,” the Global Markets Head said.
Absa Zambia Plc remains optimistic about Zambia economic outlook in the long run and is a key player in the foreign currency market of the copper producer.
Kwacha Arbitrageur