Finance Minister Alexander Chikwanda says the major reason for the weakening of the Kwacha is the increasing demand for foreign exchange on the local market against slow inflows
of the dollar.
Mr. Chikwanda said that the country was not earning enough foreign exchange due to the lower copper prices on the international market..
He pointed out that net monthly foreign exchange in 2014 exceeded US$100m but it has since fallen to US$ 85m.
Mr. Chikwanda said this when he delivered his Ministerial Statement on the Kwacha exchange rate to Parliament today.
He said the hard currency earnings will improve as the fiscal year progresses especially from the mining sector as copper prices continue to go upwards as has been the case in the last week.
Mr. Chikwanda stated that government will continue to monitor the situation and will through the Central Bank take up the necessary measures to prevent excesses in exchange rate movements.
He further said government will complement the efforts of the bank by continuing the consolidation fiscal process that will help in moderating demand conditions for foreign exchange.
“Government will always be mindful of the possible injurious effects of a weakened national currency, a robust and diversified agricultural sector can generate export earnings to furnish the country with enough and reliable hard currency to permit assured kwacha stability,’ he said.
He has since called on nation not to be unduly alarmed by the movements in the exchange rates as it has the effect of inducing speculations which can sway the exchange rate away from the fundamentals.