Answer to Question #227808 in Finance for Andrick Angel

Question

Explain the reasons why the Zambian kwacha is the best performing currency at the moment [15 marks]

Answer 1

The Zambian currency is ranked as the best because the prices of copper have rose by 11 percent after hiring 7 year low in January. This has resulted in improved foreign exchange flows from mining sector through tax receipts remitted directly to the Bank of Zambia in US Dollars as opposed to the previous system of converting payments in Kwacha first which makes the kwacha currency the best performing currency. Secondly there's a positive trade data coming out of China-Beijing's export which rose by 11.5 percent for a year early in march which was the first increase since June 2015. There is also seasons factors such as domestic tax obligations being due.

Lastly the central bank has continued with the purchase of the local gold program me. The improvement in the reserve position increases the country's ability to respond to unexpected external events and also the ability to address volatility in exchange rate.