ZAMBIA’s international reserves at the Bank of Zambia (BOZ) have dropped from US$1.4 billion last year to US$900 million as at end of February 2009.
And BOZ governor, Caleb Fundanga, said the central bank has been active on the foreign currency market by selling foreign currency to improve liquidity and help stabilise the local currency.
“Our official reserves currently stand at US $900 million, we know that the commercial banks have in their reserves about US $900 million as well, bringing the total to about US $1.8 billion. The thing is our official reserves as BOZ are US $900 million,” he said.
Dr Fundanga said last month the central bank sold US $53 million on the market.
Dr Fundanga was responding to questions from Journalists in Ndola yesterday where he attended a breakfast meeting between a Finnish business delegation and the Copperbelt business community at Mukuba Hotel organised by the Zambia Development Agency.
He said the bank was active on the market and that mitigating depreciation of the Kwacha would not go along with fixing the exchange rate, because it was bad economic management.
Dr Fundanga said there was some improvement in the exchange rate of the Kwacha against some foreign currencies following the import activities that the country was recording.
He said, “The exchange rate problem is not unique to Zambia, every currency is facing the same problems.”
And Dr Fundanga said that the central bank had no plans to knock off the zeros from the local currency.
Dr Fundanga said the central bank has never announced that it would knock off zeros on the Kwacha following substantial depreciation of the Kwacha.
“Nobody at Bank of Zambia has announced that there is such a plan of knocking off zeros on the local currency,” he said.
He said there was need to have a stable environment if such a thing was to happen.
Dr Fundanga said if an opportunity came, the central bank would announce this, but it would be expensive to go for such an exercise.
Dr Fundanga also said that the country needed to diversify into the agricultural sector to feed the yawning export market that could bring in foreign currency.
[Zambia Daily Mail]