Regulatory Alerts2002-01-01
Bank of Zambia Foreign Exchange Rates Circular 06/2002
The Bank of Zambia mandates that all commercial banks limit their foreign exchange transaction spreads to prevent excessive divergence from official dealing rates. Effective 8 April 2002, banks must ensure their posted buying rates do not exceed the central bank's dealing rate by more than two percent, maintain a two percent spread between buying and selling rates, and keep the spread between the central bank rate and their selling rate at or below four percent. Institutions failing to adhere to these limits will be barred from participating in the Bank of Zambia foreign exchange dealing window, as the central bank intensifies monitoring of displayed and reported rates.
# BANK OF ZAMBIA
## OFFICE OF THE GOVERNOR
08 April 2002
CB Circular No. 6 /2002
TO: ALL COMMERCIAL BANKS
Dear Sirs/Madam
## FOREIGN EXCHANGE RATES
Kindly be advised that with effect from today Monday 8th April 2002, all commercial banks posted buying rates should not exceed the Bank of Zambia dealing rate by 2 percent for all purchases in the foreign exchange market. Commercial banks will be required to comply with the 2 percent spread between the buying and selling rates as announced by the Minister of Finance and Economic Planning in February 2001. In addition, the spread between the Bank of Zambia dealing rate and commercial banks’ selling rate should not exceed 4%. Commercial banks that will not comply with this requirement will be excluded from participating at the Bank of Zambia foreign exchange dealing window. The Bank of Zambia shall closely monitor the displayed and reported rates.
This action has been necessitated by the fact that commercial banks have consistently breached the 2 percent spread in determining the transaction rates. Furthermore, commercial banks’ transaction rates are not consistent with the Bank of Zambia dealing rate as reflected in the excessive divergence between the two rates.
Dr. Jacob M Mwanza
GOVERNOR
---
Bank Square Cairo Road P.O. Box 30080, Lusaka, Zambia Tel: +260-1-223307 Fax: +260-1-237070 Email: governor@boz.zm Web: http://www.boz.
Share