Central bank shuts window as Kwacha crumbles

The Bank of Zambia shut its foreign exchange dealing window as the local unit lost significant ground against the US dollar on Thursday, PANA reported. Officials at the Central Bank would not immediately say why the foreign exchange dealing window had been shut, but the Kwacha has steadily tumbled amid escalating demands for foreign exchange by importers. The sharpest demand for hard currency has been from the oil companies importing finished products at an increased cost after Zambia’s only refinery, Indeni, saw its operations halted a few weeks ago by lack of crude oil or “feedstock,” for refining. Barclays Bank treasury bulletin predicted on Thursday that demand was expected to continue the upward movement until the end of the month when corporate bodies would begin to unload foreign exchange gained from sales abroad to pay taxes and settle workers’ wages. At the start of business on Thursday, the dollar was on average selling for 3,106 Kwacha in commercial banks and analysts said the local currency had very little support throughout the week from foreign exchange suppliers. Many were allegedly hoarding their foreign exchange in anticipation of a higher rate, the report said. Last week, the Kwacha slipped by 33 units, while on Monday this week, it tumbled by about 10 units.Pressure on the currency was also mirrored in the inter-bank money market where the Central Bank was noticeably out of the market as well.