Maravi

BoZ foreign reserves have declined, says Fundanga

BoZ foreign reserves have declined, says Fundanga
Written by Chiwoyu Sinyangwe and Joan Chirwa
Thursday, March 05, 2009 10:01:17 PM

BANK of Zambia (BoZ) governor Dr Caleb Fundanga hasdisclosed that foreign reserves held by the Central Bank have declined to US $900 million from about US $1.3 billion last year.

And the local currency on Tuesday weakened further against the US dollar when it traded at over K5,700 on interbank.

He said the private players in the market were also sitting on a similar foreign reserve position.

Dr Fundanga’s revelation is however contrary to a recent statement by finance minister Dr Situmbeko Musokotwane who in the post-budget discussion refused to disclose the amount of foreign reserves.

Dr Musokotwane refused to disclose the country’s foreign reserves, arguing that the move would induce speculative behaviour by some market players and threatened to deplete the country’s import capability.

But speaking in Lusaka on Tuesday, Dr Fundanga said BoZ would continue with the practice of making available the necessary statistics related to the monetary management in the country.

Dr Fundanga explained that the current levels of reserves by the Central Bank meant that the country had an import cover of about two to three months.

“We always give you these figures at our quarterly meetings; the (foreign exchange) reserves that are with us (Bank of Zambia) are about US $900 million and the private sector are also holding about US $900 million,” he said.

Dr Fundanga also expressed satisfaction with the amount of reserves in the country.

Zambia has in the recent past accumulated huge foreign reserves which last year hit the record high of over US $1.3 billion on account of increased United States dollar inflows owing to favourable economic environment in the country fueled by the all time record international metal prices.

However, following the current economic crisis, the country has witnessed a huge outflow of foreign currency reserves to safer markets, a move most analysts predict would further deteriorate the country’s foreign reserve position.

And the kwacha on Tuesday tumbled further and traded at between K5,700 and K5,750 per US dollar on interbank after opening at K5,600 and K5,650.

The Citibank treasury market report stated that the kwacha’s depreciation was mainly on the back of a jittery interbank, without much corporate demand seen in the day.

“There were few exporters noted in the market selling dollars as well,” stated Citibank. “Copper rose nearly two per cent to snap a two-day losing streak on Tuesday as the dollar slipped, but the demand outlook remained poor and traders said the rally lacked support from fundamentals. Three-month copper on the London Metal Exchange was trading at $3,440 a tonne compared with $3,385 at the close on Monday.”

Labels: BOZ, CALEB FUNDANGA

posted by MrK @ 10:02 PM