ZAMBIA TO RETAIN CURRENCY AUCTION, SAYS KAUNDA
Zambia will retain its foreign-exchange
auction system despite the suspension of weekly auctions since
January 24, President Kenneth Kaunda said.
    "We have not run away from the auction. It hasn't 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
government's shortage of foreign exchange to meet demand.
    It was suspended when the kwacha's rapid devaluation and
strong fluctuations made economic planning almost impossible
for the government and the private sector, he said.
    Weekly foreign-exchange auctions began in October 1985. The
kwacha fell from 2.20 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.
 REUTER
