OFFLOADING foreign currency on the market to stabilize Kwacha is a good short-term measure mechanism to avoid further challenges that come with it, says Private Sector and Development Association (PSDA) chairperson Yusuf Dodia.
Mr Dodia said Government’s decision to release US$120 million on the market last Friday to arrest the depreciation of the Kwacha against major convertible currencies was a correct move to ensure things did not go out of control.
He however said it was ideal move to be used only as a short-term mechanism in case there was no smooth inflow of the foreign currency which would lead to the exchange rates going up again.
Mr Dodia said Government last Friday released US$120 million on the market to arrest the depreciation of the Kwacha against major convertible currencies, a move that will see the Kwacha start rebounding by today.
President Lungu’s Special Assistant for Press and Public Relations Amos Chanda announced Government’s move to arrest the rapid depreciation of the Kwacha as well as energy deficit.
“This is something that Government does when they see that things are going out of control, it’s a very good mechanism but it’s a short term solution by Government to stabilize the kwacha and restore some confidence in the economy,” he said.
He said Government had to come up with a policy that was going to make sure that the inflow of foreign currency was sustained in order to continue stabalising and strengthening the Kwacha.
“On the ground, there is need for some other mechanism to continue sustaining the inflow of the foreign currency which is now Government challenge. That is the dilemma government will face,
“Even after Government offloads this money, given one or two weeks the money will finish and people will be looking for foreign currency and then the rate will go up again,” he said.
Mr Dodia said there was a possibility of Zambia to be starved of foreign currency because economic activities were not bringing in that money which was needed as a bulk of it came through copper exports and other commodities went outside Zambia.
“Zambia has no other source for bringing in foreign currency, the real problem is that Zambia’s real wealth is not coming in because all what we are exporting is copper, sugar, cement, veggies and meat products,” he said.