NAVIGATING EXCHANGE RATE DYNAMICS: STRATEGIES FOR KWACHA STABILITY AND ECONOMIC RESILIENCE IN ZAMBIA PRESS STATEMENT FOR IMMEDIATE RELEASE Wednesday 21th February, 2024 The appreciation and depreciation of a currency, such as the Kwacha, against major foreign currencies, particularly the US dollar, are pivotal aspects of a country’s economic dynamics. [...] In the Zambian context, the exchange rate, represented as the quantity of Kwacha required to purchase foreign currency such as one US dollar for instance, plays a crucial role in shaping economic activities and overall prosperity. [...] The recent depreciation of the Kwacha, evidenced by its decline to approximately K27 (as of early February 2024) representing a 58% decrease in value to the US dollar beginning July 2023, was primarily attributed to imbalances in the demand and supply of foreign exchange. [...] To address the challenges posed by the depreciating Kwacha and stabilize the exchange rate, the Bank of Zambia (BoZ) implemented various monetary policy interventions. [...] The decision was informed by a further increase in inflation in the fourth quarter of 2023, and the current forecast showing inflation moving even further away from the 6- 8 percent target band.
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