GOVERNMENT has been urged to consider coming up with laws that will compell exporters to deposit foreign earnings into local banks to stabilise the Kwacha, the Private Sector Development Association (PSDA) notes.
In welcoming Government’s move to inject US$120 million into the market to cushion the falling Kwacha, PSDA chairperson Yusuf Dodia said there is need for long term solutions to boost the Kwacha as the injecting of US$ 120 million into the market will only support the local unit in the short term.
Mr Dodia said in an interview yesterday that there is need to ensure export earnings are transparently remitted into the country for stability of the local unit.
“While the announcement to inject United States (US) dollars into the economy will support the currency, the support will only be for a short-term hence the need to ensure Government puts in place laws that will compell exporters to deposit foreign currency earnings into local banks to ensure stability of the Kwacha.
“Government should demand that whatever earnings generated from exports are deposited in local banks unlike the current trend where the earnings are deposited abroad…The injection of US$120 million is good in the short term but will not be sustainable in the long term,” he said.
In a separate interview, an independent financial market analyst Maambo Hamaundu said enhancing productivity through value addition and diversification are key in ensuring Kwacha and economic stability.
“We will continue to face challenges and Kwacha volatilities unless we create an industrial hub. The strength of any currency is usually dependant on the industries of that particular country,” he said.
Mr Hamaundu said Government also needs to adequately inform the country on what has led to the sharp depreciation of the local unit to reduce market speculation.
“What is critical is confidence building and explaining why the Kwacha is falling to reduce speculation,” he said.
Meanwhile, Zanaco Bank forecasts the Kwacha to trade in a wide range over the next trading sessions with central bank intervention expectations providing support although low supply will continue to weigh on the currency limiting any upside movements.
On Friday, the kwacha hit a record low against the dollar on worries that the supply of greenback would remain low and that the local currency still has more down-side potential.
The bank in its daily treasury said the market opened weaker at K9.87 and K9.89 and depreciated further to intraday lows of K10.16 and K10.18 before the Bank of Zambia intervened by selling dollars.