Zambia Looks Good; U.S. Dollar Strong

www.ozy.com [OZY]() Your World. Bold & Bright [Daily Dose]( The newsletter to fuel — and thrill — your mind. Read for deep dives into the unmissable ideas and topics shaping our world. May 11, 2022 Business Roundup The U.S. may face power outages, while the dollar strengthens due to the Federal Reserve’s hawkish moves. In African currency markets, Zambia’s kwacha competes with South Africa’s rand. The European housing market faces looming interest rate hikes. India seeks to profit from Russian sanctions as the rupee wanes. All this and more in today’s business roundup. – with reporting by Tatira Zwinoira from Harare, Zimbabwe Africa Zambia’s kwacha competes regionally According to the Canadian currency website [XE](, as of May 10, 1.059 Zambian kwacha (ZMW) will buy you one South African rand. In other words: The ZMW is neck and neck with one of the continent’s most prominent currencies. XE [data]( show the ZMW’s appreciation correlates with Hakainde Hichilema winning Zambia's presidential election last August. Since becoming president, Hichilema made sweeping changes and commitments in line with recommendations from international financiers. These recent measures include reductions in unnecessary spending, while increasing capital investments in the economy — actions that represent a sharp contrast to Hichilema’s predecessor, Edgar Lungu, under whose administration corruption and public debt were [rampant](. The ZMW’s appreciation offers benefits for Zambian business owners. “I used to peg my pricing against the dollar, but ever since the kwacha started to gain value, I no longer do that,” said Tawanda Nyamukapa, owner of the Lusaka-based restaurant startup Fratelli’s Diner, in operation for about two years. “I am seeing increased demand for our food and can buy more in terms of what is needed to make orders for customers, so that points to a better currency,” Nyamukapa told OZY. According to the Policy Monitoring and Research Centre, a Zambian think tank, the International Monetary Fund’s pledge of $1.4 billion to Zambia over the next three years has [helped]( boost the kwacha. Nigeria’s lack of refinery infrastructure proves costly Nigerian National Petroleum Corp. (NNPC) statistics show that rising oil prices are impacting Africa’s largest producer of crude oil. Because Nigeria has limited domestic oil refining capacity, the NNPC trades crude oil for refined gasoline in international markets. High global fuel prices — caused by Russia’s invasion of Ukraine — are now draining the NNPC of revenue. (Source: [Bloomberg]() Americas Dollar strengthens amid economic turmoil The dollar is surging in value even as the U.S. economy absorbs high inflation and soaring gasoline prices. The currency’s global appeal is linked to the hawkish Federal Reserve, which last week announced a series of half-point rate increases to be introduced in the coming months. Banks are also expected to benefit from the interest rate hikes. (Sources: [Bloomberg](, [The New York Times](, [The Wall Street Journal]() Will the U.S. see power blackouts? The Midcontinent Independent System Operator and other grid operators in the U.S. are warning of potential blackouts. These warnings come amid a global push for cleaner power sources that has reportedly seen traditional power plants ceasing operation before renewable energies can fully replace them. “We’re all trying to find ways to utilize as much of our renewable resources as possible … and at the same time make sure that we have enough dispatchable generation to manage reliability,” said Brad Jones, interim chief executive of the Electric Reliability Council of Texas, to The Wall Street Journal. (Source: [The Wall Street Journal]() Mexico’s president calls for Cuba’s inclusion in upcoming regional summit Mexican President Andrés Manuel López Obrador has promised to call on U.S. President Joe Biden to include Cuba in the upcoming Summit of the Americas to discuss development issues in the region. Despite belonging to the Organization of American States (OAS), Cuba has been excluded from such events since 1962 due to “incompatibility with the principles and objectives of the system,” according to the OAS website. (Source: [Bloomberg]() Europe European housing markets see interest rate upticks As global prices continue to soar due to Russia’s invasion of Ukraine, housing markets are affected by rising interest rates. The higher cost of borrowing could make homeowners’ existing debts difficult to manage, while deterring some prospective buyers in European markets. (Source: [The Economist]() Former Bank of England chief economist warns of lasting inflation Former chief economist of the Bank of England Andy Haldane says the jump in inflation has surpassed his worst fears. The U.K.’s central bank now predicts inflation will reach 10% by the end of 2022. As COVID-19 restrictions eased, people started to buy more goods — but the people selling consumer goods have struggled to obtain sufficient supply to meet consumer demand, and thus raised their prices. Price increases associated with the invasion of Ukraine have intensified the pandemic’s inflationary effects. (Sources: [Bloomberg](, [Bank of England](, [CNBC]() WATCH PAIGE HURD on [The Carlos Watson Show](, season 4! Asia Sri Lankan crisis opens door for India to curb China’s regional influence Amid acute shortages of fuel, fertilizers and medicines, Sri Lankan citizens have taken to the streets with anti-government demonstrations. These protests have seemingly opened a way for India to expand its influence in the Indian Ocean region. Last month, Sri Lanka approached the International Monetary Fund for a financial rescue package — a move supported by India but not China. India has strengthened ties with Sri Lanka by offering financial aid, something Sri Lanka critically needs as its economic woes have now caused high-ranking officials to resign. (Sources: [The Wall Street Journal](, [Bloomberg]() India enjoys bargain price for Russian gas Indian companies, including Gujarat State Petroleum Corp. and GAIL India Ltd., have started buying liquefied natural gas from Russia at prices below prevailing international market rates. These lower prices are due to western economic sanctions on Russia that have effectively given India enhanced bargaining power. This opportunity comes at a time when India is facing inflation and declining foreign investment in Indian stocks. (Sources: [Bloomberg](, [Bloomberg]() Community Corner What would you do if faced with a major power outage? Share your thoughts with us at OzyCommunity@Ozy.com. 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