Zambia’s Central Bank to Increase Reserve Ratio to Stabilize Currency

Mouad Boudina
Mouad Boudina
1 Min Read

The Zambian central bank has announced that it will implement new regulations next week, which will increase the minimum reserve requirements for both local and foreign currency deposits held by commercial banks at the state-owned institution. This move is aimed at mitigating the depreciation of the Zambian kwacha and reinforcing the nation’s economic stability. The new regulations are expected to come into effect on Monday.

According to a notice dated November 3, which was reported by Reuters on Monday, the Zambian central bank is set to raise the minimum statutory reserve ratio on various types of deposits, encompassing local and foreign currencies, government deposits, and vostro account deposits. This ratio will be elevated by 3 percentage points, from the existing 11.5% to 14.5%, effective from November 13.<

This measure has been implemented with the primary objective of alleviating the continuous pressure in the foreign exchange market, all to effectively control and mitigate inflation.

The market has remained starved of dollars while demand for the greenback has grown, putting pressure on the kwacha which has deprecated 23.27% so far in 2023, Access Bank said in a note on Monday.

Mouad Boudina

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