Michael Wamwita Writes….

I know my suit is classic but let’s talk about the dollar.

“We ve all seen the trending story that the dollar will reduce in hours when the Reds win election ”
This sounds bizarre but it’s very very possible .here is why .
Firstly. Exchange rate is basically the price of another currency. Just like the price of tomatoe is k5 so is the price of the dollar at k22 .

Those of us who have been to soweto market . U will realise that the price of a box of tomatoe is purely determined by how many farmers have brought tomatoes. If only one farmer bring tomatoe today at soweto market the price per box can skyrocket to as high as k300 per box .but if 50 farmers brought tomatoe at soweto the next day the price can drastically fall to as low as k20 per box .interesting right? 🥰.

Economist call it ,the invisible hand of demand and supply. So spa manje since we now all know that dollar exchange rate is just the same as price . How then will the dollar rate or price of the dollar reduce when the Reds or another color win election. Simple,its crystal clear that people ,businesses,investors,IMF ,u and me have lost confidence in the kwacha due to lack of prudent management by those we entrusted to manage our resource.bcoz confidence thelizno ,most people have decided to change their kwacha into dollar .causing a shortage of the dollar in the soweto market of dollars (banks ,beaurals and BOZ ) .Same as only one farmer bringing tomatoe to the market.

So only a few people bring their dollar for sale .munvesasa?…okay manje when another color wins say the reds.its likely that animal spirits will reduce the dollar rate .By the way animal spirits in economics means “confidence “,not animal spirits ija yama ancestors and juju 😂 .so when ” confidence” is restored in the kwacha. We will have more people selling their dollars at the soweto market of dollars (banks ,beaurals and BOZ) this will trigger more selling due to fear that the dollar will loose value against the kwacha….the same way the price of tomatoe drops when many farmers come to soweto or chisokone markets …munvesasa .??? .a practical example when former bank governor Dr Danny kalyalya got fired ,this dwindled peoples confidence and the kwacha lost value within 24 hrs.

So is it possible for the dollar to reduce in a few hours ,a few days or few weeks .
Absolutely YES. All we need are animal spirits in the kwacha 😂.

Urs LSK based economist.

11 COMMENTS

  1. The rule of thumb is that it is always impossible to those who don’t understand how things work and possible to those who understand.

  2. Excellent write up Michael. The Kwacha will certainly gain value if HH wins the election. Perhaps I should also say the opposite can happen if Lungu rigged (who can’t win a fair election) declares himself president. The Kwacha will lose more value by 50% because people will lose hope!!

    • It’s all about creating perceptions of confidence which PF has never shown not even one ever since 2015 when ECL came into power. Very sad

  3. In February 2018, Kylie Jenner confessed she doesn’t open Snapchat anymore and asked if anyone else had stopped using it. Afterward, Snapchat stock prices sank 6.1 percent, causing a loss of $1.3 billion in market value.

    MARKETS, MARKETS MARKET, only those who are singing ati welesnky abwelelepo will argue, Immediately the REDS enter the markets will automatically play a different different tune, it only seconds to impregnate someone, you don’t need to stay for more than 3 terms to impregnate the economy bane.

  4. Ubupuba bwa ba Tonga ubu! How do you compare tomatoes to dollars? Ubupuba tabwa kapwe! Your Hichilema is failing to run his farm , he thinks he can run a country as dull as he is! Let him just retire after he loses on August 12. I dont know where this confidence is coming from because as far as i know a Tonga cannot win an election in Zambia, voting is on regional and tribe lines! So Hichilema in his dreams thinks all the Bemba-speaking people, who occupy half of Zambia, will vote for him? That cant happen dull under 5! Keep on dreaming until you lose 10 times.

  5. My comment is on the quality of the opinion. The economist can’t even write words like because in full. They also can’t articulate themselves properly when describing the financial markets.

    I have no comment on the opinion but the quality of the opinion

  6. This is one example I have always said this hh is not intelligent. He will never make real president at this rate. Is this really a campaign promise? Like are Zambians sitting there dreaming & praying for the dollar to come down so they can go & buy dollars & go & hide it in Panama?

  7. Dalo people like hh done have my vote. Dollar is the only reason he wants state house. Zambians have bigger problems. They are hungry. They have no means to produce their own food on their land. They don’t even have kwacha, so what’s the dollar about? Zambians you are in trouble. Lungu is clueless, this thing called hh is disillusioned. It’s mind is in Panama were his dollars are.

  8. Here is a relationship better Lungu, HH and the Zambian economic.
    Lungu has impoverishment Zambian by-
    1. Failure to adhere to democracy principles.
    2. Failure to uphold the rule of law.
    3. Contracting unsustainable debt and failure to service it.
    Results are.
    Low donor/investor confirmed resulting

    Low foreign investors and poor economy.

    HH will reverse what Lunga has done for sure will see opposite results.

    1. He will adhere to democracy principle.
    2. Uphold the rule of law.
    3. Manage and renegotiate debt repayments to sustainable levels.
    And results will be-

    Increase in donor/investor confidence

    Therefore; attracting billions of foreign investment and improving the economy.

    What improve any economy is not needed resources but foreign investment. Foreign investors only comes if that country has favourable environmental (rule of law, good government & democratic)for business.

    HH’s focus is on these 3 key issues because he has understand, Pressure Mwanawasa also understands this.

    • I fail to understand how some people reason. Surely one can’t make the connection between the dollar and the kwacha and asking questions like people don’t care about the dollar because they don’t have kwacha?
      Let me make it simple. If the dollar depreciated by 50% for example, this would mean the value of the kwacha would have gone up by 50% in buying terms, meaning one then can buy a commodity which is costing K100 at only K50.
      Now tell if this still does not have an impact on a common man?
      We should remember that we are an heavily import dependant economy and so stronger exchange rates for the kwacha means cheaper costs for a common man.
      I hope this is now clear and simple enough for those who don’t know the connection.

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