Zambia’s Economic Stability Hinges on the US Dollar and Oil Supply Amid Global Tensions
Zambian economic expert, Kelvin Chisanga, has emphasized the intertwined relationship between the US dollar and oil supply, both of which have experienced significant instability in recent times.
According to Mr. Chisanga, these two critical factors are working in parallel to shape the current economic climate, with implications for both global and domestic economies.
He explained that the US dollar, despite its role as a global safe-haven currency, is currently subject to inflationary pressures. At the same time, oil prices, especially in light of geopolitical tensions such as the ongoing war in Ukraine, have become volatile due to disruptions in supply chains.
“The instability in both the US dollar and oil creates a challenging mix for economic growth, not just globally but also regionally and domestically. As food prices surge, exacerbated by limited access to oil and fertilizer from Russia, economies like Zambia are feeling the strain,” said Mr. Chisanga.
Zambia, a largely import-driven economy, relies heavily on oil—specifically diesel—to fuel its economic engines. At the same time, the US dollar plays a crucial role in gauging trade competitiveness.
He highlighted that failure to control the forex market could result in the collapse of the economy, as foreign exchange fundamentals are a significant driver of inflation.
“Controlling forex is essentially controlling price stability. By leveraging monetary policy tools such as the policy rate and open market operations, institutions like the Bank of Zambia (BOZ) can regulate inflation and stabilize the economy,” Mr. Chisanga explained.
In the current economic environment, the balance between controlling forex and stabilizing inflation through both private investments and public policy is essential.
He concluded by reiterating that Zambia’s future economic stability is closely tied to managing these external shocks through a combination of sound monetary policy and increased export activity.
