Amadeusz Juskowiak

Zambia to retain currency auction says kaunda

Zambia will retain its foreignexchange auction system despite the suspension of weekly auctions since January 24 President Kenneth Kaunda said

We have not run away from the auction It hasnt been abolished at all he told Reuters in an interview

He said the system would be reintroduced after current talks with the World Bank and the International Monetary Fund and he hoped would be backed by fresh foreign aid funds

Kaunda dismissed central bank statements the new auction system would be used to allocate foreign exchange to private bidders but not to fix the exchange rate

Kaunda said the auction system had faltered because of the governments shortage of foreign exchange to meet demand

It was suspended when the kwachas rapid devaluation and strong fluctuations made economic planning almost impossible for the government and the private sector he said

Weekly foreignexchange auctions began in October 1985 The kwacha fell from 220 to the dollar to about 15 in 16 months In January 1987 the government was more than two months in arrears in paying foreign currency to successful bidders and the auction was suspended and replaced with a fixed exchange rate of nine kwacha to the dollar