BANK of Zambia (BoZ) Governor Denny Kalyalya says the central bank will take necessary measures to curb the depreciation of the Kwacha.
He said BoZ has already instituted measures such as open market operations to stabilise the Kwacha.
Dr Kalyalya said at a media briefing yesterday the central bank may also consider adjusting the reserve ratio from 14 percent to help strengthen the local unit.
“We will continue to regulate the amount of Kwacha in circulation to try and control the activities. In the current circumstance, where there is high demand and less supply of dollars, we will try to tighten the liquidity,” he said.
Dr Kalyalya said the 19 percent Kwacha depreciation in the last three months can be attributed to a drop in copper prices on the international market and non-traditional exports.
He said BoZ will continue to review the situation and take necessary measures to address the volatility and restore stability.
Dr Kalyalya further said foreign exchange supply by the mining sector has also tumbled relatively to demand.
He, however, said despite some challenges in the foreign exchange market, there are also tremendous opportunities to grow the economy and reduce poverty levels in the country.
“On our part, we will continue to develop the financial sector and maintain a stable macro-economic environment that supports these important goals. Foremost amongst this commitment is to maintain price and financial system stability,” Dr Kalyalya said.
He also said Government’s infrastructure development projects, despite being very important, have led to higher budget deficits and increased demand for domestic and foreign resources.
Zambia Daily Mail