DEPRECIATING KWACHA BLAMED ON NEGATIVE SENTIMENTS
THEcurrent depreciation of the Kwacha could be as a result of negative sentiments because the economic fundamentals in terms of inflows and outflows of the foreign currency have not changed much to warrant the current situation, Deputy Secretary to Cabinet Christopher Mvunga has said.
Mr. Mr. Mvunga yesterday said the current depreciation of the Kwacha could have been driven by negative sentiments and that the situation will soon correct itself because the economic fundamentals had not changed. He cautioned business houses against hoarding in anticipation of a further depreciation of the Kwacha, saying the trend may be temporal and could rectify itself soon, leading to them making losses in the long-run. “It is a case of demand and supply but I think with the recent depreciation, there is also an element of sentiments which is less like speculative thinking. My warning to the general public and the business community is that they should be very careful. “If they are holding on currency with the view that the Kwacha will carry on depreciating, there is the likelihood of the situation correcting itself and they will be in huge losses. So, my caution to the general public is that do not go into speculative mood. “The economic dynamics in terms of the inflows and outflows of forex haven’t significantly changed and so there is no need why the Kwacha should be depreciating this fast. Most likely, it is as a result of negative sentiments which will correct itself,” Mr. Mvunga said.