Zambia considers reintroducing currency rules, Treasury says

Zambia is considering bringing back currency regulations to bolster the kwacha as legal tender in the southern African nation, Treasury Secretary Fredson Yamba said.

“The other objective is to ensure effectiveness in the conduct of monetary policy, whose principle purpose is price stability, a necessary condition for any economy to thrive,” he said in a statement posted to the Finance Ministry’s Facebook account.

Zambia, Africa’s second-biggest copper producer, scrapped two laws regulating foreign-exchange trading in March 2014, triggering the biggest gain in its currency in 15 months at the time. The cancellation was effective immediately and government said at the time it would consult after business criticized the regulations.

President Edgar Lungu in November blamed “dollarization of prices” for pushing inflation artificially higher following the depreciation of the kwacha, saying the practice was illegal.

“A lot of progress has been made with respect to consultations on currency regulations,” Yamba said. “The consultations have been very open and focused on getting the views and suggestions from a cross section of stakeholders on what would be the ideal regulations required to enforce the kwacha as legal tender without any disruption to business activities.”

Zambia isn’t planning price or capital controls and is committed to the principles of a free-market economy, he said.

 – Bloomberg