The central bank in Africa’s red metal producer Zambia, on 09 December opted to sterilize the market with a quantitative tightening approach which involved raising its statutory reserves by 400 basis points to 9% effective 23 December. This was in a move to curb an aggressive currency rout. The Kwacha had been on a steep slide having shaved over 8% of its valuation in a space of 2 weeks to all time lows of 15.67 for a unit of dollar. The November 18-19 rate decision meeting widened the cost of funding 125 bps to 11.5% in benchmark interest rate, the…
Author: The Editor
The central bank in Africa’s red metal hotspot have hiked statutory reserves 400 basis points to 9% effective 23 December in an effort to curb a currency slide. The Kwacha has been under pressure and currently trades for all time lows breaching the 15 psychological mark despite monetary policy tightening in the November rate decision meeting which saw 125bps to 11.5% while emergency overnight funding ebbed higher 1,000bps to 28%. Read also: Zambia this week:- Stat reserves and fuel could ebb higher, currency bears to persist The central banks move to hike reserve ratio will mop excess liquidity from the…
Once upon time 4 years ago, Zambia was in a very similar energy quagmire which I dub the Kariba crisis measuring 900 MW. Load management was rampant between 6-8 hours plugged by power imports from Mozambique’s EDM and South Africa’s Eskom. All these options to maintain power stability cost the fiscals $10million a week. This scenario let to the acceleration of completion of the Maamba 300MW geothermal and Itezhi Tezhi 120MW plants. Over dependence on hydro for power generation with very minimal attention to diversification is one of the key reasons Zambia has struggled to manage power deficit scenarios. Kariba…
Refined copper processing in Africa’s copper belt in Zambia.
Analysts in Africa’s second largest red metal hotspot Zambia are left guessing whether the central bank will call for an emergency monetary policy meeting or leave the currency to slide even further after hitting an all time low of 15.2/14.9 for a unit of dollar in 05 December trading. The Kwacha slide 3.7% in excessive dollar demand for energy and agriculture funding in thin dollar liquidity trading leaving the local unit vulnerable to loss streaking. Asset sell off pressure is also mounting as off-shores exit govie security positions given waning confidence in the copper producer. The central banks quagmire: Zambia’s…
After opening at 14.65 levels, the currency in Africa’s red metal producer Zambia, has widened its loss streak after sliding 2% to breach the 15 new psychological mark in intraday trade on 05 December. Rising dollars demand exacerbated by energy and agriculture funding needs has persisted causing the copper currency to shave significant value in today’s trading. Asset sell off pressure is becoming a pressure point from offshores especially those that want out of Kwacha positions in govies and those whose maturities could not be reinvested after bid rejections in pricey bids in last Thursdays auction. “The festivities haven’t made…
This is why we think the Zambian energy regulator could have a fuel price hike under their sleeves. Crude markets are bullish of OPEC+: Crude markets are in a bullish mood with optimism around potential supply curb extension after March 2020. OPEC+ member states led by Saudi Arabia the de facto leader and Russia leading the non OPEC members are commencing deliberations on 05-06 December to agree on the future of crude. Preliminary indications are that a 228,000 – 400,000 bbls addition to the 1.2 million bbls daily could be agreed. This has caused a rally in the prices of…
Zambia’s private sector activity is still in the woods having headlined 48.7 from 48.3 in October. November data reflected power woes that are compounding the copper producers energy bottlenecks. New orders declined marginally as output remained suppressed offset by an uptick in employment for third month running. Zambian private sector contraction pace decelerated for the fourth month signaling a bottoming in weakness. Zambias energy crisis is deepening with Kariba dam levels at 11% compared with 57% a year ago, which has compounded the power generation quagmire with parts of country experiencing blackouts of over 15 hours. This has elevated the…
Energy regulator in Africa’s copper hotspot, on 03 December commissioned a one year Cost of Service Study (CSS) in the capital Lusaka. Energy Minister Matthew Nkhuwa implored London based Energy Markets and Regulatory Consultants (EMRC) the entity chosen to conduct the study to adhere to the prescribed timeline of 12 months. Nkhuwa stated that he was cognizant that the assignment could take between 6-9 months to completion. Zambia grapples with energy pricing inefficiencies charging the lowest non cost reflective tariffs in the Southern African region which has hampered investment in power generation. The major power utility struggles with operational inefficiencies…
Refined copper processing at a Zambian mine.