Q FM Africa's Modern Radio
The Bank of Zambia (BoZ) says the supply of domestic foreign exchange on the market declined in the first quarter of 2015 as reflected in the lower sales of foreign exchange to commercial banks by the public, mining companies and foreign banks.
And the Central Bank has also disclosed that during the first quarter of 2015, domestic credit grew by 12.8 percent from 12.1% in the fourth quarter of 2014.
Briefing journalists in Lusaka this morning on the Monetary Policy, Bank of Zambia Governor Denny Kalyalya says to minimize volatility in the foreign exchange market, the Central Bank intervened directly to address some of the lumpy demand in the market mainly related to fuel and fertilizer imports.
Dr. Kalyalya says rising demand, amidst lower supply and a stronger US dollar, resulted in a weakening kwacha against the four major trading currencies notably the US dollar, British Pound, Euro and South African Rand.
He says this compounded the declining copper prices, adverse sentiments emanating from newly introduced mining tax regime for fiscal year 2015 as well as the Fitch Credit Rating’s down grade of the economy.
He adds that at the end of the quarter, the Kwacha depreciated by 19% against the US dollar to end the quarter at K7.6 and that similarly, the Kwacha registered a loss of 5%, 12% and 13% against the Euro, Pound and South African Rand to close at K8.1, K11.2 and K0.6221 respectively.
And the central bank Governor says preliminary data indicate that the overall balance of payment deficit widened to US$405.2 million from US$131.9 million recorded during the fourth quarter of 2014.
Dr. Kalyalya says the current deficit widened to US$223.3 million from US$179.6 million recorded the previous quarter, driven by a decline in the surplus on the balance on goods lower secondary income.