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Zambia, Mozambique sign currency repatriation pact

Zambia, Mozambique sign currency repatriation pact
Written by Chiwoyu Sinyangwe
Sunday, February 08, 2009 7:48:20 PM

BILATERAL trade between Zambia and Mozambique will now be conducted directly in local currencies of the two countries following the central banks’ agreement on repatriation of bank notes.

Under the agreement between the Bank of Zambia (BoZ) and the Banco de Moçambique, citizens of the two countries would now be able to pay for goods originating from the other country with the currency of that country, eliminating the need for currency conversions by citizens.

The currencies involved in the transaction are the Zambian kwacha and the metical of Mozambique.

During the signing ceremony in Lusaka on Wednesday evening, BoZ governor Dr Caleb Fundanga said currency repatriation was important as it allowed the two countries to adjust the currency circulation which was a key component of reserve money, an intermediate target in monetary policy implementation.

Dr Fundanga said the agreement provided for a legal basis for commercial banks, bureaus de change and other financial institutions to freely accept each country’s currency and repatriate it through the banking system with full accountability.

“Cross-border trade has hitherto been hindered by the need for traders from both sides of the border to convert funds into United States Dollars and then convert funds back into the other currency when purchasing goods and services,” Dr Fundanga. “By so doing, cross-border traders incur foreign exchange losses as well as other conversion costs in the process.”

Dr Fundanga also said the agreement would not only enhance trade cooperation but also increase cooperation between the two central banks.

“The agreement provides a platform for sharing information on the bank notes in use by the two central banks. This information exchange initiatives should not only end at central banks, but be extended to all economic entities that will use and benefit from this development, especially our hardworking farmers who should be paid genuine currencies when they sell their produce,” said Dr Fundanga.

And Banco de Moçambique governor Ernesto Gouveia Gove said the two central banks had agreed in principle to accepting each others currency provided it was done through official channels.

“The central banks in this regard are to be involved only in providing the framework in terms of operational guideline, otherwise the actual transactions have to be confined to commercial banks, exchange bureaus and other legally established financial institutions in both countries,” said Gove.

Labels: CURRENCY, MOZAMBIQUE, PANAFRICANISM

posted by MrK @ 7:47 PM