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The Zambian Kwacha has so far this year depreciated by 4.6 percent as at February 13, 2024 driven by constrained supply of the foreign exchange in the market.
This comes after the Kwacha depreciated by 17.5 percent against the United States (US) dollar in the fourth quarter of 2023, to an average of K24.75.
To moderate volatility and broadly support the importation of critical commodities, the Bank of Zambia (BoZ) provided market support of US$215.5 million.
This information was provided by the Central Bank Governor, Denny Kalyalya, on Wednesday at a media briefing to announce the Monetary Policy Rate for the first quarter of 2024.
Kalyalya stated that depreciation of the Kwacha was driven by constrained supply of foreign exchange amid high demand which underpinned the depreciation of the exchange rate.
“Pressure on the Kwacha to depreciate has persisted in 2024 with the exchange rate depreciating by 4.6 percent as at February 13, 2024,” he said.
Kalyalya announced some measures being put in place to mitigate the free-falling of the exchange rate such as the provision of market support worth US$215.5 million.
“In response to the on-going challenges in the foreign currency market, the statutory reserve ratio was revised by 900 basis points to 26.0 percent effective February 5, 2024 from 17.0 percent in November 2023,” he stated.
The Governor also took time to state that the turnover in the interbank foreign exchange market reduced significantly to US$14.4 million from US$185 million in the previous quarter due to low supply.
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