  Total merchandise export earnings rose by 71.2 percent to $ million in 2010 from $ million recorded in 2009, following increases in both metal and non-traditional export earnings.   Metal export earnings rose by 81.6 percent to $ million in 2010 from $ million in 2009, of which copper export earnings were US $ million and cobalt export earnings were US $ million. This was explained by the rise in copper and cobalt production following increased capacity utilisation at various mines and higher global market prices.   Exports of non-traditional products registered a growth of 34.3 percent to $ million in 2010 from $ million the previous year. This was driven by higher exports of copper wire, cane sugar, burley tobacco, cotton lint, electrical cables, gemstones, maize and maize seed, and wheat and meslin.   Total merchandise imports grew by 40.3 to $ million in 2010 from US $ million in 2009. Exchange rate   Following strong macroeconomic fundamentals and increased supply in foreign exchange, the Kwacha performed favourably against all the major traded currencies in 2010, except for the South African Rand. The Kwacha appreciated by 4.7 percent against US dollar to trade at $ from $ in 2009.   Similarly, the Kwacha appreciated by 6.0 percent against the British Pound and by 8.0 percent against the Euro to trade at £ and € respectively. 2  BIS central bankers’ speeches  However, the Kwacha registered a depreciation of 8.8 percent against the South African Rand.
In this age of increased connectivity and correlation of markets, respondents felt that a shock event such as a terrorist attack, pandemic or geopolitical instability could cause market disruptions. Respondents also highlighted the current liquidity in the financial markets. They observed that speculative liquidity was circulating in the financial system. This has led to historically unprecedented pricing and terms. When referring to the new players in the financial markets, respondents spoke of hedge funds and private equity in the same breath as “highly leveraged”, “covenant-lite structures” and “large speculative positions”. In the current low interest rate environment, many yield-hungry investors have become hedge providers for institutions. Respondents expressed concern about the systemic risks such providers posed and their default risk in a severe market correction. In summary, the responses to the survey indicated that there seems to be a heightened level of risk in the macroeconomic and financial environment. Nevertheless, these responses are encouraging from another perspective. They indicate that financial institutions are aware of this heightened level of risk. With acceptance comes preparedness for the risks that may materialize in future. It is important for banks not to become complacent. As banks pursue the many opportunities that lie ahead, we must not let our guard down. Banks must not be lulled into a false sense of security by the external environment’s bullishness and resilience to shocks so far. We must not allow ourselves to get over-confident with our knowledge and analyses of the risks out there. Risks may deviate from expectations.