The proverbial fight between the Kwacha and Dollar continued today (26:10:17) as Bank of Zambia reported the Dollar had finally breached the K10 barrier on interbank at 12:30 pm. An analysis of the performance of the Kwacha since January this year shows the currency had its best months in the first half of the year. However, sharp increase could erase the gain it has made thus far. There is something fueling this and FIZ is investigating why?
Premier companies that often report exchange losses due to an appreciating currency such as AEL Mining in their half year report, will inevitably see gains in the second half of the year if the upward trend increases. Furthermore, export-centric firms will also see increases (positive) exchange gains on their income statements.
The central bank will be mauling over the prospects of missing their inflation target for 2018 if this trend continues. We can only imagine our beloved economists sitting around a huge mahogany table meditating over the numbers. October can not get any hotter than this.