GOVERNMENT has no intentions of reverting to foreign exchange controls to shore up the Kwacha as a measure of curing the speculative distortions that has caused the Kwacha to hit its all-time low, trading at K12 against the United States dollar, the presidency has said.
President Edgar Lungu has emphasised that the speculative behaviour was unnecessary and urged market players to play by the rules consistent with the values of a free-market economy.
Special assistant to the President for press and public relations Amos Chanda said the depreciation of the kwacha against major convertible currencies was being caused by speculative behavior.
The kwacha has hit an all-time low trading at K12 against a United States Dollar.
Mr Chanda said President Edgar Lungu has however assured the business community and the general public not to panic, as Government did not intend to revert to foreign exchange controls to shore up the currency.
Mr Chanda said this in a statement issued yesterday from New York where President Lungu is attending the 70th United Nations (UN) Summit.
“The Government is concerned with the current developments in the foreign exchange market, where the Kwacha has depreciated sharply against major foreign currencies. Notwithstanding the adverse global economic developments, the sharp depreciation of the Kwacha is excessive and not consistent with the movements in the fundamental drivers of the exchange rate,” Mr Chanda said.
Mr Chanda said Government, through the Bank of Zambia was closely monitoring developments and is taking necessary and appropriate measures to stabilise the exchange rate in order to ensure that it was consistent with the economic fundamentals.
“These measures will be complemented by prudent fiscal management and in this regard His Excellency, Mr. Edgar Chagwa Lungu, President of the Republic of Zambia, has directed that increased fiscal interventions be made to improve the existing economic fundamentals so that there is favourable foreign exchange liquidity in the market,” he said.
Mr Chanda explained that the Bank of Zambia governor Den Kalyalya had assured the President that various measures were being implemented by the Central Bank.
He said the President was satisfied that the Monetary Policy Committee in consultation with the Ministry of Finance, would continue with measured interventions and monitor market trends to ensure the foreign exchange market is normalised.
Mr Chanda said President Lungu had reiterated Government’s commitment to maintaining a liberalised foreign exchange market.