U.S. interest rates rise to hurt Zambia's economy: analysts

Analysts say the decision by the U.S. Federal Reserve to increase interest rates will have a negative effect on the Zambian economy.

The U.S. central bank increased the range for its benchmark interest rates for the first time since 2006 to between 0.25 percent and 0.5 percent from the previous range of 0 percent to 0.25 percent.

Analysts say the rise will put pressure on Zambia's currency, kwacha.

Stanbic Zambia chief executive officer Charles Mudiwa on Friday said the U.S. move would result in higher borrowing costs for developing countries like Zambia, though he added the effect would be "gradual".

Mudiwa said the move would bring out capital movement towards the U.S. market.

The movement of money from investment in the emerging markets towards the U.S. would put pressure on the local environment, resulting in excessive pressure on the local currency, he said.

Leonard Mwanza, the chief executive officer of the Bankers Association of Zambia, told local media recently kwacha had depreciated significantly this year due to declining prices of copper on the international market, while the U.S. decison could make the situation worse.

Copper accounts for about 70 percent of Zambia's foreign exchange earnings. Endit