The Statutory Reserve Ratio has been raised by the Bank of Zambia (BoZ) from 9 to 11.5 percent in order to manage the escalating currency rate volatility.
The 2.5 percentage point rise in the statutory ration, according to BOZ Deputy Governor for Operations FRANCIS CHIPIMO, is also intended to protect the stability of the foreign exchange market.
According to Dr. CHIPIMO, despite the Central Bank’s support for the market through sales of forex earnings, primarily from mining corporations, the foreign currency market has been subject to persistent depreciation pressure.
The market, he continues, has been characterized by a meager supply of foreign exchange despite a high demand from market participants for a variety of uses, including imports of essential goods like fuel, medications, and agricultural inputs.
Dr. CHIPIMO adds that if the trend is not stopped, it could threaten the newly stable macroeconomic situation.
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