10 December 2012

Zambia: BOZ Told to Address Rebasing Concerns

THE Zambia Institute of Marketing (ZIM) has called on the Bank of Zambia (BoZ) to address concerns being raised by the business sector over would-be adverse effects of the rebasing of the Kwacha on the growth of investments.

ZIM president David Kombe said although the rebasing of the Kwacha was going to boost local and foreign investors' confidence in the currency, there were a number of outstanding issues surrounding the exercise which need to be explained to the business community and the consumers.

"The biggest concern we have as ZIM is that there is need for more sensitisation about the impact and effect of the rebased Kwacha on the market immediately after it is introduced," he said.

Mr Kombe, who was speaking during the ZIM gala night at the Savoy Hotel in Ndola at the weekend, however, said the rebasing of the Kwacha has long-term positive attributes.

He said introducing the rebased Kwacha and minting of the coins by the central bank would in the long-run bring a lot of benefits.

Officiating during the same function, BoZ regional director Chisha Mwanakatwe said BoZ was impressed with the business sector's support to the decision to rebase the Kwacha.

He said the minting of the coins was an economic venture undertaken by BoZ because they had a longer shelf life compared to notes.

Mr Mwanakatwe said there was no need for the business community to panic over how they were going to have their money changed because the period of rebasing the old Kwacha with the rebased one would last up to 2015.

And a financial analyst has said the Kwacha will in the short-term continue being under pressure because of the limited supply of the United States (US) dollar on the market.

Maambo Haamaundu in response to a Press query said that currently the exchange rate was being driven by demand and supply as such the local unit would continue being under pressure.

Mr Haamaundu said the performance of the Kwacha in 2012 had not been good saying the local unit opened trading this year at about K5,150 against the US dollar and end of March, it had depreciated to K5,315.

"In April the Kwacha made a recovery and was trading at about K5,250 against the dollar. In the months of May and June the Kwacha depreciated reaching levels of K5,345. In the month of July the Kwacha was bullish and made significant appreciation and was trading at about K4,870," Mr Haamaundu said.

He said from August to date the Kwacha was generally depreciating against major convertibles adding that its performance against other major convertible currencies can best be described as volatile.

"This volatility was due to pronouncements and actions of the Government such as the issues relating to Zamtel and all things being equal, with the rate of exchange being driven by demand and supply, the Kwacha is expected to close in the range K5,300-5,400," he said.

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