Rebounding of Kwacha due to limited circulation -Nkhoma

Economist Noel Nkhoma has attributed the rebounding of the Kwacha to the limited local currency in circulation.

Mr. Nkhoma explains that with the Bank of Zambia stopping open market operations, it is indirectly asking the banks to offload their dollars on the market to be able to get the kwacha so as to meet the market operations.

Noel Nkhoma

He has however cautioned that the country should be careful as in doing so it may be creating a problem, while dealing with another problem.

Mr. Nkhoma who is also former Economics Association of Zambia president says closing open markets may hurt the industries as the cost of borrowing from the banks will become expensive.

He says dealing with the kwacha’s stability requires a balancing act, adding that it is a question of choice whether the country should loosen monetary policy to allow the kwacha to go back onto the market or to deal with the depreciation of the kwacha at the cost of suffocating the small and medium enterprises.

Mr. Nkhoma states that the best would have been to allow the kwacha to fully find its old value as opposed to instituting monetary measures.