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Sunday, March 22, 2009

Zambia bans foreign currency use

Sun, 22 Mar 2009 18:13:24 GMT | PressTV

Zambia has banned the US dollar in domestic transaction, along with other foreign currencies to ensure the kwacha gains economic value.

In the last six months, Zambia's kwacha has plunged 30 percent against the US dollar, forcing a decline in export earnings and pushing foreign investment to almost zero.

The bank of Zambia has banned non-residents from borrowing kwacha in order to boost currency losses.

Zambian Trade, Commerce and Industry Minister Felix Mutati reiterated that there would be heavy penalties on business that uses foreign currencies especially the US dollar.

According to Mutati, introducing statutory instruments is aimed at ensuring business firms trade in Kwacha and that "the effects of dollarisation" are curbed.

Zambia's main industry comes from its copper resources which are the largest in Africa. However, the recent fall in world copper prices has taken a heavy toll on the Zambian economy.

The International Monetary Fund (IMF) says because of its dependence on copper, Zambia is "highly vulnerable to the adverse effects associated with the global recession."

Zambia now hopes to save its drowning economy with measures, such as using a $200-million loan from the IMF to boost its foreign currency reserves -- which have since August 2008 gone down by 40 percent -- and enforcing a one-year foreign currency ban.

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