Former Bank of Zambia (BoZ) Governor Caleb Fundanga says the long term solution to stabilizing the Kwacha is by increasing the country’s export base.
Dr. Fundanga’s advice comes in the wake of concerns by economic experts that the US$178 million which the Central Bank claims it injected into the market to stabilize the Kwacha could at best and if it was injected at all only provide temporal relief.
Meanwhile, one week after the purported injection of $178 million, the Kwacha has lost more value. Check on Bank of Zambia for yourself http://www.boz.zm/ And these are just central Bank rates. The value of the Kwacha in commercial banks and other commercial financial institutions is even worse.
Fundanga says his idea of strengthening the Kwacha is based on the fact that factors that have led to its depreciation including the strengthening of the US Dollar and the fall in copper prices are beyond the country’s control and that the intervention the central Bank has made may not solve the problem.
Dr Fundanga says this is why he believes the long term measure is the diversification of the country’s export base.
The former Bank of Zambia Governor has told QFM News in an interview that this is in view of the fact that nontraditional exports are growing with the latest statistics indicating that the country exported to a tune exceeding US$3 billion dollars compared to the year 2002 when country was only exporting up to US$200 million.
And Dr. Fundanga has advised that interventions the Central Bank makes in the country’s economy should not be by way of announcing what its involvement will be.
Dr. Fundanga explains that if for example the Central Bank announces what its interventions in the country’s foreign exchange will be, currency traders could take positions and buy the foreign exchange to depress the currency further more and sell the same foreign currency back onto the market.