Banning Foreign Currencies: ZIM Living In Zambia’s Past
Five years Ago, Zambia lifted forex restrictions to ease pressure on kwacha. Reuters reported in 2014 that Zambia had lifted foreign currency restrictions that banned the use of dollars for domestic transactions as authorities sought to ease pressure on the kwacha.
This flashback is essential particularly when Zimbabwe just reintroduced its dollar. Through Statutory Instrument 142, the Reserve Bank of Zimbabwe banned the use of all foreign currencies for domestic transactions.
This is a clear contrast to what the Zambian Finance Minister (2014), Alexander Chikwanda, did.
Zambia had in 2012 and 2013 enacted regulations which required domestic transactions to be quoted and paid for in kwacha and gave the central bank authority to monitor foreign currency transactions.
Reversing the regulations, Chikwanda said:
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We had interacted with the business community and they made very strong representation against these statutory instruments.
The kwacha was losing value against the US dollar. It, however, firmed after Chikwanda’s announcement and traded at 6.15 from 13 to the dollar only a day after the regulations were lifted.
The effects of the reintroduction of the Zimbabwean dollar are yet to be seen.