(a)[2]
Identify from Fig.1 the month with the largest monthly appreciation of the Kwacha.
- During which month did this happen? [1]
- How large was the appreciation? [1]
(b)[3]
Explain what Fig.1 indicates about the type of exchange rate system used by Zambia.
(c)[6]
Explain how the change in the value of the Kwacha from September 2005 to January 2006 may have been affected by
- the stronger export performance [3]
- the fall in foreign debt. [3]
(d)[3]
How would an appreciation of the Kwacha change Zambia’s terms of trade?
(e)[6]
Discuss whether an appreciation of its exchange rate always helps a country.