Zambia’s central bank to address volatility in exchange rate to ensure financial stability

Xinhua News Agency | Sep 15, 2020 at 3:54 PM

LUSAKA, Sept. 15 (Xinhua) -- Zambia's central bank said on Tuesday that addressing volatility in the exchange rate is critical in achieving and maintaining price and financial system stability.

The Bank of Zambia (BoZ) said it will continue to use all available monetary and foreign exchange intervention options to address adverse developments in the foreign exchange market.

The Kwacha, the local currency, has come under intense pressure in recent weeks, depreciating by 8.0 percent, largely reflecting imbalances in the foreign exchange market, the central bank added.

It noted in a release that this has mainly been due to lower foreign exchange sales from the mining industry as well as foreign financial firms who typically invest in government bonds.

According to the release, the reduced mining sector supply was consistent with the gradual general reduction in exports in general, which has been worsened by the COVID-19 pandemic.

"In addition, operational challenges at key mining firms, which have been significant suppliers of foreign exchange in the past, has compounded the situation," it said.