Maravi

(TIMES) Offshore investors shun State securities

Offshore investors shun State securities
...as they contribute to Kwacha fall
By Business Reporter

SOME offshore investors have lately been shunning Government securities in the money market, Bank of Zambia (BoZ) deputy governor for operations, Denny Kalyalya has said. The development has contributed to the kwacha’s depreciation against other convertible currencies.

In an interview in Lusaka, Dr Kalyalya said most of the offshore players in the money market were not as active as they had been in the past, when they have had to scramble for the Government’s treasury bills and bonds that the central bank auctions.

“One of the reasons for the pressure on the kwacha is that some of the players who buy Government securities have not been doing that lately,” he said.

The global financial crisis was also contributing to the appreciation of foreign currencies and leading to rising stock prices.

This in a way put pressure on the local currency, as investors in the offshore markets were playing a ‘wait and see’ game.

Dr Kalyalya said the other reason for the depreciation of the kwacha was attributed to the fact that inflows of foreign currency had reduced in the past weeks owing to reduced metal prices.

He explained that the fall in metal prices on the international market, which had seen the price of copper for instance drop from around US$8,000 per tonne in April this year to below $5,000 meant that the mining companies were earning reduced revenue from mineral sales.

“Therefore, when there is such a reduction in the foreign exchange earnings by the critical sectors, the exchange rate tends to move in the opposite way,” he said.

The BoZ deputy governor said other investors simply stayed away from committing their investments because of the uncertainty in the political environment.

As they await the outcome of the presidential election in a week’s time, they want to be sure about which of the contesting candidates would win and determine how safe their investments would be, he added.

Labels: BONDS, DENNY KALYALYA

posted by MrK @ 4:33 PM