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Zambia’s central bank says exchange rate volatility requires ‘extraordinary’ measures

Published

1 year ago

November 26, 2023

The Bank of Zambia (BoZ) has reiterated that the country’s exchange rate requires extraordinary measures, justifying recent upward adjustments in the statutory reserve ratio for financial institutions.

In an effort to relieve pressure on the local currency, the BoZ modified its Statutory Reserve Ratio on both the Kwacha and foreign currencies earlier in November by 3%.

The minimum statutory reserve ratio for government and Vastro deposits, as well as deposits made in local and foreign currencies, was raised from 11.5 percent to 14.5 percent by three percentage points.

In response to concerns expressed by stakeholders regarding the changes, BoZ Governor, Denny Kalyalya clarified that these were extraordinary steps required to manage the situation.

This was stated by Kalyalya on Wednesday in Lusaka during the Monetary Policy Rate announcement for the fourth quarter of 2023.

“It looks like that did not have the intended effect, we therefore had to revisit that measure and we concluded that additional adjustment is required. All these are extraordinary measures that we thought were necessary to address an extraordinary situation that we are facing, people may ask are you not making things worse?

“Well, our view is that the situation we are experiencing is not a good one anyway, so we cannot just watch it because it will deteriorate even further so we have curtail these measures and review them as time goes by so that we can make adjustment as the situation dictates,” he said.

Zambia is currently having an eventful economic year with swinging developments around its debt restructuring efforts which have also affected its currency value and exchange rate. Its official creditors had rejected its bond deal with foreign holders, while the International Monetary Fund (IMF) recently approved a staff-level agreement on the second review of its Extended Credit Facility, unlocking another $184 million subject to IMF board approval.

Related Topics:Bank of Zambia Featured Zambia

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Moroccan annual inflation rises to 0.8% in November

Published

2 days ago

December 21, 2024

Ifeoluwa Dada

Morocco’s statistics office has confirmed that the country’s annual inflation rate, as determined by the consumer price index, increased from 0.7% in October to 0.8% in November.

Monthly, consumer prices decreased by 0.2% from October.

The primary driver of inflation, food costs, grew by 0.8% compared to the previous year, while non-food inflation climbed by 0.7%. Core inflation, which does not include more erratic items like food, increased 2.6% annually and 0.2% monthly.

According to the central bank, inflation is expected to average 1% this year, down from 6.1% last year.

Despite the Al-Haouz earthquake, a spike in inflation, and worldwide economic challenges, Morocco’s GDP grew by 3.4% in 2023.

A recovery in tourism, robust industrial exports, and rising private consumption—all bolstered by prudent macroeconomic policies—were the main drivers of growth.

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Nigeria’s $42bn foreign reserves enough for 9 months’ imports— Central Bank

Published

3 days ago

December 20, 2024

Ifeoluwa Dada

According to Olayemi Cardoso, Governor of the Central Bank of Nigeria (CBN), the nation’s $42.01 billion in foreign reserves can cover imports of goods and services for almost nine months.

Cardoso promised Nigerians improved economic fortunes in 2025 while addressing the Senate Committee on Banking, Insurance, and Other Financial Institutions yesterday in Abuja at the presentation of the performance index report.

Cardoso stated: “External Reserves rose from $ 38.35 billion it was on September 30, 2024, to $ 42.01 billion as of December 12, 2024”.

He clarified that third-party receipts in Q3 2024 and revenues from taxes connected to crude oil were the main drivers of the rise in foreign reserves during the specified time.

“We saw remarkable improvements in our trade balance and maintained a current account surplus,” he added.

“Our external reserves level can finance over 9.09 months of import of goods and services or 13.91 months only, higher than the international benchmark of 3.0 months and a robust buffer against shocks”.

On cash shortage, the CBN boss reiterated the N150 million fine against any branch of banks caught illegally distributing new Naira notes to currency hawkers and unscrupulous elements and said the Nigerian economy will improve in 2025 through policies and measures.

He predicted a stronger economic future: “Despite our economy’s challenges, there are clear reasons for optimism.

“The gradual stabilization of the forex market, ongoing banking sector recapitalization, and positive growth trends in key sectors, especially the services sector, indicate a path toward recovery and stability.”