Lusaka - The recent slide in Zambia's kwacha is only temporary and the central bank will not deplete its reserves through interventions to bolster the currency, Finance Minister Alexander Chikwanda said on Friday.
The kwacha currency of the leading African copper producer has lost more than 13 percent against the dollar so far this year due to lower prices for the metal and a tight supply of the greenback.
It was trading at 6.30 to the dollar at 10.09 GMT after reaching a record low of 6.42 on Wednesday.
“The weakening in the kwacha parity is temporary and the government will not be tempted into taking interventions that may deplete our reserves,” Chikwanda told reporters at a media briefing.
He also said the government had lifted a law banning businesses in Zambia from quoting prices in dollars. “We had interacted with the business community and they made very strong representation against these statutory instruments,” he said.
The minister added that Zambia's debt is within sustainable levels. The copper producer's external debt stood at $3.2 billion at end of 2013.
“The government is mindful of the need to safeguard debt sustainability,” he said. “Current levels of domestic and international debt are within sustainable levels.”
Fitch affirmed Zambia's credit rating at B on Thursday, after downgrading the sovereign last year. The ratings agency said Zambia's economic performance was strong and forecast GDP growth of 7.2 percent in 2014, but it warned about the government's expansionary fiscal policy.