Recent Kwacha depreciation reviewed By Kampamba Shula

 By Kampamba Shula
The Zambian kwacha has been depreciating considerably over the last four months and there is plenty speculation and pointing of fingers as to what could be the cause. Some accusations of the current of government as being at fault in issuing incoherent statements may have some ground but I highly doubt that can waver the fundamentals.
A recent article by the daily mail highlights them here.
What could be the cause of the Kwacha depreciation?

Key fundamentals are the money supply which has remained fairly stable as we have not seen an increase in the sale of bonds and treasuries apart from the anticipated sovereign bond issue.
Domestic policy to lower interest rates may also attribute to the depreciation but I chose to overlook this since lags are usually involved.
Foreign currency reserves held by banks could also be a factor given some uncertainty and investors looking for a safe-haven.But again overlooking Fitch rating recent downgrade the fundamentals for doing business in Zambia remain solid.
Another possible cause could be a trade deficit,according to the last release of the data by the Zambia statistical office,Zambia recorded a trade surplus in the first 2 months of 2012 ruling out the possibility of national trade as the cause of deflation.
Central Statistics Reports
A phrase by Sherlock Homes says "After considering all alternatives ,whatever remains no matter how improbable is the answer"
In our case the what remains is that too much money was printed during the elections,it had a lag effect and this is the result..and people looking to change "mattress money" have been doing it now.