Zambia’s latest move to restrict foreign currency use in domestic transactions is aimed at stabilizing its currency, the kwacha, according to central bank Governor Denny Kalyalya. The Bank of Zambia announced this initiative in June and is still consulting market participants, with no set implementation date. Kalyalya highlighted that foreign currency use hinders effective monetary policy. The plan has drawn criticism, given the nation’s ongoing economic recovery from a debt default and a severe drought. Over the past year, the kwacha has weakened by 22% against the dollar. Despite the dollar not being widely used, certain sectors, like real estate and car sales, price goods in foreign currency. Zambia also faces an unprecedented power crisis, with households receiving as little as three hours of electricity daily. While the mining sector has largely avoided cuts by importing power, other industries are struggling, and the central bank has yet to fully assess the crisis’ economic impact.
Zambia's Dedollarization Plan Aims to Strengthen Kwacha Stability
This article was published more than a year ago. Some information may no longer be current.
WRITTEN BY
SHARE
