Maravi

Levy's rumoured death shakes local, foreign exchange markets

Levy's rumoured death shakes local, foreign exchange markets
By Chiwoyu Sinyangwe, Joan Chirwa and Mutuna Chanda
Wednesday July 09, 2008 [04:00]

THE rumoured death of President Levy Mwanawasa last week shook both local capital and foreign exchange markets resulting in sharp movements, according to experts. ccording to Financial Markets Association of Zambia president Michael Bwalya, trading on the local foreign exchange market was suspended for about one hour last Thursday morning when international news filtered in that President Mwanawasa had died.

And Pangaea Renaissance Securities Limited managing director Ceasar Siwale said the rumour caused some movements at Lusaka Stock Exchange (LuSE) especially from international institution investors who were selling their shares in Celtel Zambia Plc.
In an interview yesterday, Bwalya said panic rocked the foreign exchange market leading to the suspension of trading.

Last week, the local currency posted 5.3 per cent depreciation in a free-fall situation, weakening from opening levels of K3, 210 and K3, 230 per US dollar to K3, 380 and K3, 400 at the close of trading.

"The kwacha was in a free fall situation," Bwalya said. "It was just headed in one direction where everyone was just buying. Players became very cautious, instead of quoting firm prices, they were quoting indicative figures."

However, he said trading was reopened after Bank of Zambia (BoZ) reassured commercial banks that there was enough liquidity in the market.

On the reported shortage of the local currency, Bwalya doubted the situation, saying there was more kwacha on the market being used to purchase dollars, leading to its depreciation.

"The kwacha depreciated last week because there was more of the currency being used to buy dollars," Bwalya said. "From our point of view, banks did not witness any shortage of the kwacha and I don't know how true it is that bureaus didn't have the kwacha."
And LuSE's all share index last week recorded a 0.45 per cent drop from 4,180.66 points to 4,162.02 points with Celtel Zambia Plc accounting for the bulk of trade with 14,397,951 shares worth K11.98 billion in 89 trades.

Siwale said although the movements occurred mostly in shares for Celtel Zambia Plc, other stocks remained stable and stressed that international players would wait for the progress on the President's health.

"Yes the rumour affected the local capital market and mainly, it was the international players who were selling Celtel Zambia Plc shares," said Siwale. "However, other stocks remain stable and international players will wait and see the way forward."

Labels: ECONOMY, MWANAWASA

posted by MrK @ 3:20 AM