ZAMBIAN CURRENCY FALLS AT FOREIGN EXCHANGE AUCTION
The Zambian currency further depreciated
yesterday at the second auction since the introduction of a
two-tier foreign exchange system last month.
    The (central) Bank of Zambia said the kwacha was pegged at
16.99 to the dollar, compared to last week"s rate of 15 to the
dollar.
    The bank, which offered six mln dlrs at the auction,
reported demand for 13.4 mln dlrs. At the previous auction, the
government offered eight mln dlrs.
    Last month the government set a fixed exchange rate of nine
kwacha per dollar, subject to adjustment against a basket of
five currencies, for certain official transactions.
    It also introduced a new weekly foreign exchange auction
only for parastatal organisations and the private sector, where
the exchange rate is allowed to float in accordance with market
demand.
    The new auction system is designed to be more restrictive
than the previous one, suspended in January after the central
bank fell 10 weeks in arrears to successful bidders.
    Under the new system, no bidder, except the the state oil
company Zimoil and the national airline Zambia Airways, is
allowed to bid for more than five pct of the foreign exchange
on offer.
 REUTER
