Regulatory Alerts2003-01-01
Bank of Zambia Determination of the Buying Rate
The Bank of Zambia issued Circular 10/2003 to announce a change in how its official foreign exchange buying rate is calculated. Effective July 1, 2003, the central bank will replace the previous marginal auction rate with the weighted average of all successful bids to align with the new interbank foreign exchange system. The existing 1.6 percent spread for the selling rate and the 1.1 to 2 percent spread between buying and selling rates will remain unchanged.
# BANK OF ZAMBIA
## OFFICE OF THE DEPUTY GOVERNOR - OPERATIONS
June 30, 2003
CB Circular No. 10/2003
To : All Commercial Banks
## DETERMINATION OF THE BANK OF ZAMBIA BUYING RATE
As you are aware, the Bank of Zambia, in consultation with the various stakeholders in the foreign exchange market, has commenced the process of implementing the broad-based interbank foreign exchange system.
In line with the objectives of the broad-based interbank foreign exchange system, the Bank of Zambia wishes to begin re-aligning its official rates to the market rates. As a first step in this process, the Bank of Zambia wishes to advise that effective Tuesday July 1, 2003, the weighted average rate of all the successful bids in the auction shall become the Bank of Zambia buying rate. The current system of determining the rate, where the marginal rate struck in the auction becomes the Bank of Zambia buying rate, will be discontinued.
However, the application of the spread of 1.6 percent to obtain Bank of Zambia selling rate shall be maintained. Further, the spread between the selling and buying rates shall continue to be within the range of 1.1 – 2 percent.
Denny H Kalyalya (Dr)
DEPUTY GOVERNOR – OPERATIONS
Cc: Governor
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Bank Square, Cairo Road P.O. Box 30080, Lusaka, Zambia Tel: +260-1-226844 Fax: +260-1-237070 Email: dkalyaly@boz.zm Web: http://www.boz.zm/
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