PRESIDENT Lungu has directed that increased fiscal interventions be made to improve economic fundamentals to stabilise the sharply-depreciating Kwacha.
The local currency is slipping fast against major convertible currencies and was yesterday trading at K12.35 per United States (US) dollar.
The President said in a statement issued by his special assistant for press and public relations Amos Chanda on Tuesday that increased fiscal interventions will improve the existing economic fundamentals so that there is favourable foreign exchange liquidity in the market.
He said the measures will be complemented by prudent fiscal management.
Mr Lungu is satisfied that the monetary policy committee in consultation with the Ministry of Finance will continue with measured interventions and monitor market trends to ensure the foreign exchange market is normalised.
He urged the business community and general public not to panic as the government does not intend to revert to foreign exchange controls to shore up the currency as a measure to cure the speculative distortions.
The President reiterated Government’s commitment to maintaining a liberalised foreign exchange market.
He said speculative behaviour is unnecessary and urged market players to “play by the rules consistent with the values of a free market economy”.
Government is concerned with the depreciation of the Kwacha, which has fallen by over 30 percent within the last three weeks.
“Notwithstanding the adverse global economic developments, the sharp depreciation of the Kwacha is excessive and not consistent with the movements in the fundamental drivers of the exchange rate,” Mr Lungu said.
He said Government, through the Bank of Zambia (BoZ), is closely monitoring developments and is taking necessary and appropriate measures to stabilise the exchange rate to ensure it is consistent with the economic fundamentals.
BoZ governor Denny Kalyalya has assured the President that various measures are being implemented to stabilise the currency.