If presidential results are petitioned, Kwacha might depreciate – Expert

Economic expert, Salwindi Notulu has indicated that […]

Economic expert, Salwindi Notulu has indicated that prolonged political uncertainty may cause investors and businesses to delay financial decisions and cause the kwacha to depreciate if presidential elections results are petitioned.

Speaking in an interview with Zambian Business Times – ZBT, Notulu said investors are likely to remain cautious until they are certain about the political outcome, warning that this could result in limited liquidity in the short term.

He indicated that prolonged uncertainty could also directly affect the exchange rate. “Our exchange rate will be affected and Zambia is likely to see the Kwacha depreciating if investors continued holding onto their money,” said Notulu.

 He added that depreciation would have wider consequences, particularly through higher fuel costs and inflationary pressure, while some businesses could also reduce operations as they wait for greater clarity on the political environment.

He further mentioned that the uncertainty is capable of affecting production, with some businesses potentially operating below capacity and some traders delaying investment decisions until the electoral process is fully concluded.

 However, the economist said the immediate outlook could remain challenging regardless of which political side emerged victorious, arguing that “in the short term, we expect a little bit of depreciation” before stability could return over the longer term.

By Philip Sinkala