Political sketch
Formerly Northern Rhodesia, as well as part of the British Central Africa and later the Federation of Rhodesia and Nyasaland (also called the Central African Federation). Independent from the United Kingdom on 24 October 1964.
Portuguese traders established posts in the early 1700s at the juncture of the Zambezi and Luangwa rivers. The Scottish missionary David Livingstone reached the upper Zambezi River in 1851. Emissaries of Cecil Rhodes and the British South Africa Company concluded treaties with most Zambian chiefs in the 1890s. The company administered the region until 1 April 1924, when it became a British protectorate. In 1911 it became known as Northern Rhodesia. Copper and other mining, which continue to be important sources of revenue, developed in the early 1900s, helping spur an influx of white settlers. In 1935 the capital was moved from Livingstone to Lusaka. After 1930 Africans began to attain increasing political power. During the early 1950s the movement for Zambian independence was launched by the United National Independence Party (UNIP) and the African National Congress (ANC). In 1953 Northern Rhodesia, under British auspices and despite strong opposition from the African majority, joined with Nyasaland (now Malawi) and Southern Rhodesia (now Zimbabwe) to form the Central African Federation, also known as the Federation of Rhodesia and Nyasaland. Southern Rhodesia dominated the federation, and blacks did not wish for whites to rule the federation as they ruled Southern Rhodesia.
The federation dissolved in 1963, and on 24 October 1964 Zambia gained independence from the United Kingdom. Kenneth Kaunda of the UNIP became president. In 1969 he embarked upon a policy of nationalization that began with the copper industry and was later extended to other industries and to the commercial sector. In 1973 a new constitution made Zambia a one-party state. The UNIP remained the sole political party until 1990, when , after riots and an attempted coup, constitutional amendments legalized opposition parties. Zambia's economy declined under Kaunda as a result of bad economic policies and the country's participation in the boycott of trade with the white minority regime of Rhodesia (now Zimbabwe). Kaunda and his party lost the elections of 1991. Zambia has a functioning though still somewhat fragile democracy. Copper remains the main export.
Wars since 1500
First World War in East Africa, 1914-1918 (Germany against United Kingdom, France, Belgium, Portugal) (Zambia was a minor battleground; it was involved in the war mostly as a staging area).
Convertibility
The sterling area:
On 2 August 1914, soon after the First World War began, the United Kingdom issued a proclamation imposing a one-month moratorium of payment for bills of exchange accepted before 4 August; an act of 3 August 1914 gave legislative sanction to the proclamation. The moratorium was subsequently extended for a month and ended on 4 November 1914. Legally the pound sterling remained convertible into gold and could be exported, but the risk to shipping from German submarines made the cost of shipment prohibitive, so the United Kingdom was in effect off the gold standard. The British government refused to include private shipments of gold in its war-risk insurance scheme. After the war, the export of gold was prohibited from 1 April 1919 under regulations that were given statutory form in 1920. On 28 April 1925 the government announced that the act would not be renewed when it expired on 31 December 1925. On 13 May 1925 the United Kingdom resumed the gold standard.
The United Kingdom abandoned the gold standard on 21 September 1931. The currencies of British colonies were almost all linked to the pound sterling through currency boards; being on a sterling-exchange standard rather than a gold-exchange standard, they followed the pound sterling off gold. Over the next few years, some former British colonies (Australia, New Zealand, South Africa) and other countries that had important trade links with the United Kingdom switched from gold to the pound sterling as their official or actual anchor. The result was termed the sterling area. The United Kingdom imposed exchange controls on 4 September 1939, the day after entering the Second World War. Most countries that were not current or former British colonies soon left the sterling area. Among the remaining countries, both current- and capital-account transactions were free of restrictions within the sterling area, but were restricted in dealings with outside countries. After the Second World War, the United Kingdom returned to the gold standard under the Bretton Woods system. It removed exchange controls on 15 August 1947, but reimposed them on 20 August 1947 after suffering a large loss of foreign reserves. Sterling had a dual exchange rate from 1961 until the United Kingdom abolished exchange controls. The sterling area remained in existence because sterling was not fully convertible. It began to crumble after the United Kingdom again abandoned the gold standard on 23 June 1972. By January 1973 the sterling area had shrunk to the British Isles and a few small British colonies; even Hong Kong had abandoned sterling as its anchor currency. The United Kingdom abolished exchange controls on 24 October 1979, ending the sterling area.
Zambia alone:
On 23 February 1961, the Federation of Rhodesia and Nyasaland extended exchange controls to the sterling area (Federation of Rhodesia and Nyasaland, Currency and Exchange Control [Temporary] Act 1961, cited in Bank of Rhodesia and Nyasaland annual report 1961: 20). Exchange control was extended indefinitely on 30 November 1962 (IMF ARER 1963: 317). It was carried over into Rhodesia (Zimbabwe), Zambia, and Malawi when the Federation of Rhodesia and Nyasaland dissolved (Bank of Zambia annual report 1964/1965: 6). Zambia left the sterling area on 23 June 1972.
Other
Defaults on or restructurings of debt to the private sector (mainly from Purcell and Kaufman 1993 and Standard & Poor's 2004): 1983-1994 (foreign currency bank debt, oil and interest rate shocks).
Reinhart and Tokatlidis (2000: 33) dating of recent financial liberalization: Domestic (notably interest rates) 1992, external (notably foreign-exchange market and participation by foreign financial institutions) 1994.
Banking crises (data since 1970s mainly from Caprio and Klingebiel 1999 and Frydl 1999): A crisis 1994-1995 (a bank with 13% of system's assets failed in 1995).
Frankel and Rose (1996) list of currency crashes: 1983, 1989.
The Southern Rhodesia Currency Board accumulated a reserve against the depreciation of its silver coins in circulation, because it counted the silver content of the coins as an asset on its balance sheet. On 31 March 1940, the end of the board's financial year, the depreciation reserve was 3.6% of total assets, whereas by 31 March 1946 the reserve was 10.6% of total assets (Southern Rhodesia Currency Board annual report, 31 March 1940: 5; 31 March 1946: 4).
References
Primary sources:
--Laws and decrees:
Great Britain (United Kingdom). Gazette. 1665-present. Oxford Gazette (1996-1666); London Gazette (1666-present). Oxford (1665-1666); London (1666-present): His/Her Majesty's Stationery Office from 1903. Online at <http://www.gazettes.online.co.uk>; as of September 2005, gazettes since 1900 are available.
Northern Rhodesia. Gazette. 1911-1964. Northern Rhodesia Government Gazette. Issued by British South Africa Company 1911-1924. Livingstone (1911-1937); Lusaka (1937-1964): British South Africa Company (1911-1924); [Northern Rhodesia] Government Printer (1924-64). (Successor to North-Eastern Rhodesia gazette; succeeded by Zambia gazette.).
North-Eastern Rhodesia. Gazette. 1903-1911. North-Eastern Rhodesia Government Gazette. Fort Jameson. (Issued by British South African Company. Succeeed by Northern Rhodesia Gazette.)
Rhodesia and Nyasaland (Federation). Gazette. 1953-1963. Federal Government Gazette. Salisbury, Southern Rhodesia. (Apparently issued alongside Northern Rhodesia gazette; succeeded by Zambia gazette.)
Zambia. Gazette. 1964-present. Zambia Government Gazette. Lusaka: Government Printer. (Also called the Zambia Gazette or Republic of Zambia Gazette.)
--Publications of monetary authorities:
Bank of Rhodesia and Nyasaland. Annual report. 1956/1961-1964. Annual Report. Salisbury, Southern Rhodesia: Bank of Rhodesia and Nyasaland. (The first annual report covers the period 1956-1961.)
Bank of Zambia. Annual report. 1964/1965-present. Report and Statement of Accounts for the Period August 7th 1964 to December 31st 1965 (1964/1964); Report for the Year Ended December 31st ... (1966-present). Lusaka: Bank of Zambia
Bank of Zambia. Bulletin. 1971-1985? Quarterly Statistical Review (1971-1979); Quarterly Financial and Statistical Review (1979-1985?). Lusaka: Bank of Zambia.
Rhodesia and Nyasaland (Federation). Central African Currency Board. Annual report. 1953/1954-1955/1956. First [Second, Third] Report of the Central African Currency Board. Salisbury, Southern Rhodesia: Central African Currency Board (printed by Governent Printing and Stationery Office).
Southern Rhodesia Currency Board. Annual report. 1939/1940-1952/1953. First Report of the Southern Rhodesia Currency Board, Covering the Period Ended 31st March, 1940 (1939-1940); Second [etc.] Report of the Southern Rhodesia Currency Board, Year Ended 31st March, 1941 [etc.] (1940/1941-1952/1953); the Seventh, Ninth, Tenth and Eleventh reports have the word "Annual" in their titles, but the rest do not. Salisbury, Southern Rhodesia: Government Stationery Office.
--Web site of the current monetary authority (viewed 20 September 2005):
<http://www.boz.zm>
--Other publications or Web sites:
None.
Main secondary sources:
De Kock, Gerhard [Petrus Christiaan]. 1954. A History of the South African Reserve Bank (1920-1954). Pretoria: J. L. van Schalk.
Henry, J[ames] A., and H. A. Siepmann. 1963. The First Hundred Years of the Standard Bank. London: Oxford University Press. (The Standard Bank operated widely in Africa.)
IMF ARER. 1950-present. International Monetary Fund. Annual Report on Exchange Restrictions (1950-1978), Annual Report on Exchange Arrangements and Exchange Restrictions (1979-1988), Exchange Arrangements and Exchange Restrictions: Annual Report (1989-present). Washington: International Monetary Fund. (Contains information on IMF member countries and some of their dependencies.)
Mwenda, Kenneth Kaoma, editor. 2002. Banking and Micro-Finance Regulation and Supervision: Lessons from Zambia. Parkland, Florida: Brown Walker Press.
Pick's Currency Yearbook. 1955-1977/79. New York: Pick Publishing. Succeeded by Pick's World Currency Report and later World Currency Yearbook.
Reserve Bank of Zimbabwe. 1983. The Currency Media of Southern Rhodesia (from the Time of the Charter to 1953), of the Federation of Rhodesia and Nyasaland (from 1954 to 1963), of Rhodesia (from 1964 to 1979), and of Zimbabwe (from 1980). Harare: Reserve Bank of Zimbabwe.
Sowelem, R[afik] A[hmed]. 1967. Towards Financial Independence in a Developing Economy: An Analysis of the Monetary Experience of the Federation of Rhodesia and Nyasaland, 1952-63. London: Allen and Unwin.
Zulu, Justin B., and N. A. Mujumdar. 1970. Money, Banking and Economic Development in Zambia. Lusaka: Bank of Zambia.
Monetary authorities: Zambia
| Dates | Type | Name | Source | Remarks |
| March 1906
-31 October 1940 |
free banking | multiple (2) note-issuing banks | United Kingdom, Standard Bank of British South Africa (later Standard Bank of South Africa) Memorandum of Association, 13 October 1862, cited in Henry and Siepmann (1963: 5); South African Republic (later Transvaal province of South Africa), Volksraad Resolution No. 1223, 8 August 1890 (chartering De Nationale Bank der Zuid-Afrikaansche Republiek, called National Bank of South Africa from 1902), cited in Arndt (1928: 377 n. 10; Mashonaland, Legal Tender Regulations, 1895, cited in Reserve Bank of Zimbabwe (1983: 19) | The first bank was the Standard Bank of South Africa (headquarters London, England), in Kalomo, in March 1906 Henry and Siepmann 1963: 155, 330). At the time, Kalomo was the capital of Northern Rhodesia. The second bank was the National Bank of South Africa (headquarters Pretoria, South Africa), in Lusaka, in 1918. The National Bank of South Africa absorbed by Barclays Bank (Dominion, Colonial and Overseas) (headquarters London, England) in February 1926. It and the Standard Bank of South Africa were the only two note-issuing banks during this period. Notes issued by banks ceased to be legal tender on 1 March 1942 (Southern Rhodesia Currency Board annual report, 31 March 1942: 1). Southern Rhodesian coins were first used in Northern Rhodesia (now Zamiba) in 1934 (Reserve Bank of Zimbabwe 1983: 6). |
| 1 November 1940
-11 March 1954 |
joint currency board (as part of a currency union) | Southern Rhodesia Currency Board (headquarters Salisbury, Southern Rhodesia [now Harare, Zimbabwe]) | Southern Rhodesia, Coinage and Currency Act, Act No. 32 of 1938, cited in Southern Rhodesia Currency Board annual report, 31 March 1940: 1; Southern Rhodesia, Proclamation No. 36 of 1939 cited in Southern Rhodesia Currency Board annual report, 31 March 1940: 1; Southern Rhodesia, Coinage and Currency Amendment Act, No. 23 of 1942, cited in Southern Rhodesia Currency Board annual report, 31 March 1943: 1; Southern Rhodesia, Coinage and Currency Amendment Act, 1947, cited in Southern Rhodesia Currency Board annual report, 31 March 1947: 1 | The three colonies of British Central Africa established a currency board to gain seigniorage for member governments. Initially the agreements of Northern Rhodesia (now Zambia) and Nyasaland (now Malawi) to participate were informal, but they later became formal. Northern Rhodesia made an agreement with Southern Rhodesia in 1944 accepting the act of 1938 (cited in Southern Rhodesia Currency Board annual report, 31 March 1945: 1; see also Southern Rhodesia Currency Board annual report, 31 March 1941: 1). The currency board took over issuance of coins from the Southern Rhodesian treasury on 1 March 1940, and issued its first notes on 8 June 1940. The 1942 amendment allowed the currency board to hold up to 7% of its assets in securities of Southern Rhodesia and up to 3% in securities of Northern Rhodesia. Total reserves were 110%, so the principle of 100% foreign reserve backing was effective. The 1947 amendment raised the percentages to 10% for Southern Rhodesian securities, 7% for Northern Rhodesian securities, and 3% for Nyasaland |
| 12 March 1954
-31 March 1956 |
joint currency board (another) (as part of a currency union) | Central Africa Currency Board (headquarters Salisbury, Southern Rhodesia [now Harare, Zimbabwe]) | Federation of Rhodesia and Nyasaland, Coinage and Currency Act, Act No. 5 of 1954, cited in Central African Currency Board annual report, 31 March 1954: 1 | Northern Rhodesia (now Zambia) and Nyasaland (now Malawi) gained a larger role in the new joint currency board. British coins remained accepted as legal tender through 31 December 1954 in Northern Rhodesia and Nyasaland (Central African Currency Board annual report, 31 March 1954: 2). The Central Africa Currency Board used Southern Rhodesian notes and coin designs and never issued its own distinctive designs. The only local assets of the currency board were a small amount of Southern Rhodesian securities, never exceeding 5% of total assets, despite provisions that allowed it to hold more. |
| 1 April 1956
-6 August 1964 |
joint central bank (as part of a currency union) | Bank of Rhodesia and Nyasaland (headquarters Salisbury, Southern Rhodesia [now Harare, Zimbabwe]) | Federation of Rhodesia and Nyasaland, Bank of Rhodesia and Nyasaland Act, No. 2, March 1956, cited in Central African Currency Board annual report, 31 March 1956: 4 and Bank of Rhodesia and Nyasaland annual report 1961: 1 | The Federation of Rhodesia and Nyasaland established a central bank as the monetary counterpart to greater political self-government. The central bank issued federal notes and coins. |
| 7 August 1964
-present (2005) |
own central bank | Bank of Northern Rhodesia / Bank of Zambia from 24 October 1964 (headquarters for both Lusaka, Zambia) | Zambia, Bank of Zambia Act, June 1965, cited in Bank of Zambia annual report 1964/1965: 4 | Malawi, Zambia, and Rhodesia (now Zimbabwe) each established separate national central banks when the Federation of Rhodesia and Nyasaland broke up. The Bank of Northern Rhodesia was established to begin banking operations on 7 August 1964 as successor to Bank of Rhodesia and Nyasaland; its changed its name to the Bank of Zambia 24 October 1964. The Bank of Zambia Act was actually passed later. The central bank issued its first notes on 16 November 1964 and its first coins on 25 January 1965 (Bank of Zambia annual report 1964/1965: 5). Zambia joined the IMF on 23 September 1965. |
Exchange rate arrangements: Zambia
| Dates | Official arrangement | Source | Unofficial arrangement, if different | Remarks |
| 1894
-1 November 1914 |
fixed; local £1 = UK£1 = 7.32238g gold | Mashonaland, Ordinance No. 3 of 1891 (of the British South Africa Company, which operated present-day Zimbabwe and Zambia as a concession at the time), cited in Chalmers (1893: 240); Rhodesia, Ordinance No. 6 of 1894, cited in Reserve Bank of Zimbabwe (1983: 5) | The 1891 ordinance adopted the laws of Cape of Good Hope then in force, including its coinage laws. The 1894 ordinance extended the territorial limits of the laws farther north, apparently including present-day Zambia. Royal (United Kingdom) proclamations of 1910 and 1911 specified various British coins for use in Southern Rhodesia (Reserve Bank of Zimbabwe 1983: 5). The Southern Rhodesian pound, later to be used in what are now Zimbabwe, Zambia, and Malawi, did not exist as an officially separate currency from the pound sterling until 1 March 1940. | |
| 2 November 1914
-17 May? 1925 |
fixed; local £1 = UK£1 | de Kock (1954: 7-8) on South Africa | The currencies of the United Kingdom and South Africa both floated against gold in this period. Southern Rhodesia (Zimbabwe) followed, and Northern Rhodesia (Zambia) followed Southern Rhodesia because Southern Rhodesia was the regional financial power. Local bank notes were made forced tender in Southern Rhodesia by the Bank Notes Ordinance, 1922, and Northern Rhodesia passed a local act applying the law in its territory. The acts were repealed in 1925 when the United Kingdom returned to the gold standard (Bond 1988: 57 n. 6). | |
| 18 May? 1925
-11 October 1931 |
fixed; local £1 = UK£1 = 7.32238g gold | Kock (1954: 78) on South Africa | The United Kingdom returned to the gold standard on 27 April 1925; South Africa and Southern Rhodesia (now Zimbabwe) returned on 18 May 1925, hence I conjecture that Northern Rhodesia (now Zambia) also returned on the latter date. | |
| 12 October 1931
-31 October 1940 |
fixed; local £1 = UK£1 | Henry and Siepmann (1963: 237) | Pick's Currency Yearbook (1964-1965: 411) says of Southern Rhodesia that black-market trading started at the beginning of the Second World War, but was rarely sizeable except when there was speculation that the pound sterling would be devalued or there was local unrest. Rates generally followed rates for the South African pound, but at a level 4-5% more depreciated. I assume this held also for Northern Rhodesia. | Northern and Southern Rhodesia (now Zambia and Zimbabwe) abandoned the gold standard soon after the United Kingdom, which had done so on 21 September 1931, but considerably before South Africa. A local act (Southern Rhodesia, Act No. 34 of 1931) was passed to make notes issued by banks forced tender until currency board notes replaced them starting in 1940 and ending with the withdrawal of all notes issued by banks in 1942. Northern Rhodesia again followed Southern Rhodesian legislation. |
| 1 November 1940
-11 March 1954 |
fixed (as part of a currency union); Southern Rhodesian £1 = UK£1 | Southern Rhodesia, Coinage and Currency Act, Act No. 32 of 1938, cited in Southern Rhodesia Currency Board annual report, 31 March 1940: 1 | See above. | The Southern Rhodesian pound was created when a regional currency board came into existence. It was named after the pound sterling. Northern Rhodesia made an agreement with Southern Rhodesia in 1944 accepting the act of 1938 (cited in Southern Rhodesia Currency Board annual report, 31 March 1945: 1; see also Southern Rhodesia Currency Board annual report, 31 March 1941: 1). |
| 12 March 1954
-31 March 1956 |
fixed (as part of a currency union); Central African £1 = UK£1 | Federation of Rhodesia and Nyasaland, Coinage and Currency Act, No. 2 of 1954, cited in Central Africa Currency Board, 31 March 1954: 1 | See above. | The Southern Rhodesian pound was renamed to reflect the increased participation of Northern Rhodesia (Zambia) and Nyasaland (Malawi). British coins were demonetized in Northern Rhodesia and Nyasaland on 1 January 1955. |
| 1 April 1956
-6 August 1964 |
pegged (as part of a currency union); Central African £1 = UK£1 | Federation of Rhodesia and Nyasaland, Bank of Rhodesia and Nyasaland Act, No. 2, March 1956, cited in Central African Currency Board annual report, 31 March 1956: 4 and Bank of Rhodesia and Nyasaland annual report 1961: 1; Government Gazette Notice No. 52 of 1956 | The black market rate was Central African £1= US$2.65 in 1960-1961, versus an official cross rate of US$2.80 (Pick's Currency Yearbook 1964-1965: 411). In the black market the Central African pound was therefore more depreciated against the US dollar than the pound sterling was. | The Federation of Rhodesia and Nyasaland replaced its currency board with a central bank, so the exchange rate changed from fixed to pegged. |
| 7 August 1964
-6 March 1966 |
pegged; Zambian £1 = UK£1 = 2.48828g gold | Bank of Zambia annual report 1964/1965: 7; IMF ARER (1965: 591-2) | Pick's Currency Yearbook (1970: 557) lists a parallel rate of Zambian £1 = US$ 2.55 at the end of 1965, the first year available for Zambia alone. | The Zambian pound replaced the Central African pound upon the breakup of the Federation of Rhodesia and Nyasaland. Zambia joined the IMF 23 on September 1965. The central bank began operations at the start of this period, but did not actually issue its first local notes and coins until 16 November 1964. |
| 7 March 1966
-17 November 1967 |
pegged; Zambian £1 = UK£1 = US$2.80 2.48828g gold | IMF, 42nd Schedule of Par Values, 15 September 1966: 5, 25 | Pick's Currency Yearbook (1970: 557) lists a parallel rate of Zambian £1 = US$ 2.65 at the end of 1966. | Zambia registered a par value for its currency with with the IMF. |
| 18 November 1967
-15 January 1968 |
pegged; Zambian £0.85488 = UK£1, or Zambian £1 = US$2.80 = 2.48828g gold | Bank of Zambia annual report 1967: 2 | Pick's Currency Yearbook (1970: 557) lists a parallel rate of Zambian £1 = US$ 2.45 at the end of 1967. | Did not follow the devaluation of the pound sterling on 18 November 1967. |
| 16 January 1968
-22 August 1971 |
pegged; 1 Zambian kwacha = UK£0.585 = US$1.40 = 1.24414g gold | Zambia, Currency Act, 1967, cited in Bank of Zambia annual report 1967: 3; Bank of Zambia annual report 1968: 1; IMF ARER (1969: 529, 531) | Pick's Currency
Yearbook (1970: 557)
lists a parallel rate of
Zambian £1 = US$0.95
at the end of 1968 and
US$0.90 at the end of
1969.
RR: Monthly parallel market data begin in July 1970. Parallel market premium in mid double digits. |
Introduced a decimal currency at 2 Zambian kwacha = Zambian £1. Kwacha means "dawn" in the local Bemba language. Gold convertibility for all countries ended in practice when the United States abandoned the gold standard on 15 August 1971. |
| 23 August 1971
-3 December 1971 |
pegged; 1 Zambian kwacha = UK£0.585 = 1.24414g gold (nominally) | IMF ARER (1972: 493) | RR: Parallel market premium moves to high double digits. | The Zambian kwacha remained pegged to the pound sterling and in effect ceased being pegged to the US dollar. |
| 4 December 1971
-21 December 1971 |
pegged; 1 Zambian kwacha = US$1.40 = 1.24414g gold (nominally) | Bank of Zambia annual report 1971: 2; IMF ARER (1972: 493) | RR: Parallel market premium in high double digits. Managed float. | Switched from the pound sterling to the US dollar as the anchor currency, in effect devaluing against the pound sterling. The gold parity, now purely nominal, remained unchanged. |
| 22 December 1971
-14 February 1973 |
pegged; 1 Zambian kwacha = US$1.40 = 1.14592g gold (nominally) | Bank of Zambia annual report 1971: 2; IMF ARER (1972: 493) | RR: Parallel market premium peaks at 154% in Jnauary 1973. Managed float. | Followed the devaluation of the US dollar against gold on 18 December 1971. Subsequently, by the end of the month, Zambia adopted wider margins. |
| 15 February 1973
-8 July 1976 |
pegged; 1 Zambian kwacha = US$1.55556 = 1.14592g gold (nominally) | Bank of Zambia annual report 1973: 2 | RR: Parallel market premium frequently above 100%. Managed float. | Did not follow the devaluation of the US dollar on 13 February 1973. |
| 9 July 1976
-16 March 1978 |
pegged to rigid basket; 1 Zambian kwacha = 1.08479 SDR = 1.14592g gold (nominally) | Bank of Zambia bulletin, September 1976: 2 | RR: Parallel market premium occasionally above 200%. Managed float. | Switched to the SDR as the anchor and devalued about 20% (the previous cross rate had been 1 Zambian kwacha = 1.35767173 SDR). |
| 17 March 1978
-31 March 1978 |
pegged to rigid basket; 1 Zambian kwacha = 0.976311 SDR = 1.14592g gold? (nominally) | Bank of Zambia bulletin, March 1978: 9; June 1978: 2; IMF ARER (1979: 461) | RR: Parallel market premium market premium above 100%. | Devalued to counter government budget deficits and a stagnating economy. By this time the gold definition of the kwacha had ceased to be meaningful, so IMF ARER does not mention what happened to it. |
| 1 April 1978
-11 August 1980 |
pegged to rigid basket; 1 Zambian kwacha = 0.976311 SDR | International Monetary Fund, Board of Governors, Resolution No. 31-4, 30 April 1976 ("Second Amendment") | RR: Parallel market premium falls from triple digits to high double digits. Managed float. (RR say multiple rates were introduced in 1979, but IMF ARER does not mention them.) | The system of gold par values officially ended by agreement of IMF members. |
| 12 August 1980
-6 January 1983 |
pegged to rigid basket, dual rate; official rate 1 Zambian kwacha = 0.976311 SDR | IMF ARER (1981: 465) | RR: Parallel market premium typically in mid double digits. Managed float. | Introduced a maize export subsidy scheme, a type of dual exchange rate. |
| 7 January 1983
-6 July 1983 |
pegged to rigid basket, dual rate; official rate 1 Zambian kwacha = 0.781049 SDR | Zambia, Minister of Finance, announcement of 7 January 1983, reprinted in Bank of Zambia bulletin, March 1983: 22; see also same source, p. 2 | RR: Parallel market premium in low double digits. Managed float. | Devalued by 20%. The central bank suspended foreign-exchange trading on 7 January 1983 (Bank of Zambia, A.D. [Authorised Dealers] Circular No. 2/83, 7 January 1983, cited in Bank of Zambia annual report 1983: 82). It allowed trading to resume on 10 January 1983. |
| 7 July 1983
-3 October 1985 |
flexible basket, dual rate | Bank of Zambia bulletin, September 1983: 2; IMF ARER (1984: 541) | RR: Parallel market premium rising from low to high double digits, with brief peaks above 100%. Managed float. | Switched to an undisclosed basket as the anchor. Apparently around this time, Zambia also imposed a special tax of 10% on sales of foreign exchange for overseas travel--a kind of dual exchange rate. |
| 4 October 1985
-7 January 1986 |
independent float | Bank of Zambia annual report 1985: 5 | RR: Parallel market premium ranging from high to mid double digits. Freely falling. | Floated and unified the exchange rate. Foreign exchange for the government continued to be allocated by quotas, not by price. |
| 8 January 1986
-30 January 1987 |
independent float, multiple rates | Bank of Zambia, A.D. [Authorised Dealers] Circular No. 4/86, January 1986, cited in Bank of Zambia annual report 1986: 91 | RR: Parallel market premium ranges from low to high double digits. Freely falling. | Introduced special foreign exchange payments for non-Zambian agricultural producers who exceeded certain output quotas. |
| 31 January 1987
-16 March 1987 |
independent float | IMF ARER (1988: 535) | In practice, a band.
RR: Parallel market premium in high to mid double digits. Freely falling / freely floating. |
Unified the exchange rate, pegged kwacha to a basket of Zambia's main trading partners, and allowed exchange rate to float within a band of 9.00-12.50 Zambian kwacha = US$1. |
| 17 March 1987
-1 May 1987 |
independent float, dual rate | IMF ARER (1988: 535) | In practice, a band.
RR: Parallel market premium in low double digits. Freely falling / freely floating. |
Introduced a dual exchange rate. The range of the band continued to be 9.00-12.50 Zambian kwacha = US$1. |
| 2 May 1987
-3 May 1987 |
independent float | IMF ARER (1988: 535) | In practice, a band.
RR: Too brief a period to say anything about parallel market premium. Freely falling / freely floating. |
Unified the exchange rate. |
| 4 May 1987
-8 November 1988 |
pegged; 8 Zambian kwacha = US$1 | IMF ARER (1988: 535) | RR: Parallel market premium rising to over 500% near end of period. Freely falling / freely floating. | Pegged to the US dollar at a rate representing an appreciation from the previous rate. |
| 9 November 1988
-31 December 1988 |
pegged to rigid basket; 13.4115 Zambian kwacha = 1 SDR | IMF ARER (1989: 554) | RR: In November 1988 the parallel market premium reached 974%. Freely falling / freely floating. | Devalued and switched to the SDR as the anchor. The prevailing cross rate shortly before the devaluation, at the end of October 1988, was approximately 10.76 Zambian kwacha = 1 SDR, so the devaluation was approximately 25%. The US dollar remained the intervention currency. |
| 1 January 1989
-31 December 1989 |
crawling peg to SDR (IMF: pegged to SDR) | IMF ARER (1990: 558) | RR: In May 1989 the parallel market premium reached all-time high of 1,221%. Freely falling / freely floating. | Devalued on several occasions during the period, to 28.98852 Zambian kwacha = US$1 on 29 December 1989. The central bank made large devaluations in July 1989 and December 1989. |
| [recheck: am I missing something here or did I just write the end date incorrectly above?] | ||||
| 19 February 1990
-22 April 1991 |
band?, dual rate (IMF: adjusted according to a set of indicators) | IMF ARER (1991: 561) | The second rate, the
"market exchange
rate," was more
flexible.
RR: Parallel market premium in mid to low triple digits. |
Introduced a second rate. Zambia devalued the official exchange rate on several occasions during the period, from 24.40 Zambian kwacha = US$1 on 19 February 1990 to 42.50 Zambian kwacha = US$1on 31 December 1990. |
| 23 April 1991
-13 October 1992 |
crawling peg to US dollar | IMF ARER (1992: 549) | RR: Parallel market premium falls to single digits. Freely falling / freely floating. | Unified the exchange rate. Zambia devalued on several occasions in 1991, to 90.20 Zambian kwacha = US$1 on 31 December 1991. |
| 14 October 1992
-1999 |
independent float | IMF ARER (1993: 572) | RR: Parallel market premium ranges from single digits to mid double digits, and is in mid to low double digits from July 1997 until data end in December 1998. Freely falling / freely floating. | Introduced a floating market rate for most transactions; other rates applied to the remaining transactions. On 7 December 1992, the foreign exchange bureau rate, which began to exist at the start of this period, was merged with the official rate. On 2 October 1996, the central bank began to adjust its buy-sell spread, which had been 2%, on a daily basis; on 26 November 1996, it set the spread at 1.6%. |
| 1999
-present (2005) |
managed float (IMF: independent float, reclassified as managed float 30 June 2001) | IMF ARER (2000: 970; 2002: [page on reclassification]) | RR: Freely falling / freely floating to August 2001; freely floating August-December 2001, when data end. | Unified the exchange rate sometime during the year; IMF ARER does not specify the date. On 23 July 2003 the exchange rate became determined in the interbank market and there was not set spread (IMF ARER 2004: 1054, 1057). |