EXCHANGE RATE: WHAT IT IS AND WHY IT MATTERS
The exchange rate is simply the price of the Kwacha compared to other currencies.
Just as tomatoes have a price, the Kwacha also has a price.
Example
Imagine there is only one bag of mealie meal in a village and ten families want it. The price will go up because demand is high.
Now imagine there are one hundred bags of mealie meal and only ten families want them.The price will come down because supply is abundant.
Currencies work in exactly the same way.
National Example
If many investors bring US dollars into Zambia to build mines, factories and businesses, there are more dollars available. At the same time, if Zambia exports more copper and receives more dollars, the supply of dollars increases.
As dollars become more available, the Kwacha becomes stronger.
Why It Matters
A stronger Kwacha helps reduce the cost of fuel, medicines, fertilizer, machinery and other imported goods.
UPND Milestone
Debt restructuring, improved reserves, increased investor confidence and mining investment have all contributed to strengthening the foundations supporting the Kwacha.
Saviour Chishimba
President
United Progressive People (UPP)
UPND Alliance Partners