Consumer Price Index (CPI) in Africa’s second largest copper hotspot Zambia rose 170basis points to 15.7% as lagged effects of March priced into Aprils print. Announcing April inflation, the Zambia Statistics Agency revealed that consumer price index rose to 15.7% an increase attributed to food prices ebbing higher coupled with amplified effects of currency depreciation on non-food component of the index impacting motor vehicle and solid fuel importations. Inflation environment remains elevated. The upper bound of Zambia’s inflation target of 8% will remain breached in the medium to long term as the cost environment remains elevated from higher energy…
Author: The Editor
Amidst a COVID19 pandemic, Zambia’s commercial bank earnings season reveals a deteriorating credit environment that is taking a toll on financial institutions performance. According to quarterly published financial statements, Standard Chartered Bank Zambia Plc’s after tax earnings slid to a record loss observed in over two decades on account of widened credit impairments and increased non – interest expenses. Inferring from the credit environment, it is likely that the banks credit modeling reflected the sovereign downgrade costing it a higher impairment stock which could also be linked to a lowered credit assessment on a sector or counterparty name. The…
Absa Zambia Head Office in Lusaka the capital.
Stanbic Bank Head Office in Lusaka the capital.
Fitch rating agency recently downgraded Zambia’s long term issuer rating to ‘CC’ from ‘CCC’ given deteriorating fiscal conditions exacerbated by coronavirus pandemic effects.
In the week commencing the 26 April, the Kwacha is expected to trade in risk-off mood extending a losing streak given the fading currency conversion steam observed in the previous week. The Kwacha joins the ranks of other emerging and frontier market currencies in bearish trajectory as they nurse effects of a stronger dollar in the COVID era. Dollar index against a basket of 6 major currencies DXY currently pegs above 100.2 as more underwhelming data breeds uncertainty around the state of the global economic health. The copper currency was earlier supported by corporate conversions of dollars to raise Kwacha…
Amidst a disease pandemic that has brought economic activity almost to a halt, market players currently reflect risk skew towards shorter dated higher yielding government securities. With 2 yards of Kwacha assets on offer in the week ending the 24 April, the central bank in Africa’s red metal miner recorded higher appetite for shorter dated (=>1year) assets than fixed income securities. T-bills more attractive and less risky. The Bank of Zambia recorded a 129% bid cover ratio in Thursday 23 April Treasury bill sale raising K1.2billion in cash terms of the K950million of short dated assets on offer. Demand for…
The evolution of risk from financial to non-financial has seen a reshuffling in the prioritization resource allocation map of sovereigns. Disease pandemic in 2020 surpassed climate change effects throwing fiscal budgets into limbo as production possibilities cripple. In as nations seek debt relief as obligations balloon, home grown solutions can never be overlooked to cushion effects of supply disruptions especially in the food industry. Africa’s second largest copper producer Zambia is one nation that has not been spared of the disease pandemic effects. Amidst a partial lock down for 28 days, Head of State Mr. Edgar Lungu on 25 April,…
Having opened trading at 18.475 the Kwacha sprinted 2.02% to an intraday low of 18.1000 again the Dollar on supported by corporate conversions to meet payroll obligations well ahead of the April month end. Foreign currency demand from central bank green back purchases saw the copper currency shave 1.13% of earlier gains to close trading at 18.305. The Kwacha technicals signal a rising momentum for further appreciation seeing that 22 April intraday lows of 18.1000 for a unit of dollar was firmer than previous days 18.225. Zambia’s currency has shriveled in value over 50% as it grapples with low reserves…
Copper cathodes in transit to South Africa.