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ZAMBIAN CURRENCY (More Information...)
The
Kwacha
(ZMK) is the current legal tender of the Republic of Zambia.The
Zambian Kwacha (K) is divided into 100 Ngwee. Prior to
independence, notes and coin in denominations of £10, £5, 10s and 5s,
2s-6d, 2s, 1s, 6d, 3d, and 2d circulated in the country as legal
tender. After independence, the Bank issued the first Zambian notes
and coin in similar denominations, although different in design. In
order to allow for a smooth changeover, the two currencies circulated
alongside each other until December 15, 1965, when the old currencies
were withdrawn from circulation for subsequent demonetization, except
for the 3d coin which continued to circulate, for a brief period.
Together with the Zambian £. s. d. currency, a 5s proof coin to
commemorate independence was issued. It was later followed by an
ordinary 5s coin for circulation purposes.
In 1967, the Government
decided in favour of decimalisation and designated the main unit as
Kwacha comprising of 100 ngwee. The Kwacha was equivalent to the old
ten shillings. The Currency Act, 1967 replaced the Zambian £. s. d.
currency for new Kwacha notes, and ngwee coin. Thus on January 16,
1968, the Zambian Pound was replaced by the Kwacha with the new
Official Rate equal to one half the old unit, or US$1.40. The £5 note
became K10, the £1 note K2, then ten shilling note one Kwacha note and
a new 50 ngwee note was introduced to correspond to the old 5
shillings, 2 shilling coin became 20 ngwee, one shilling coin became
10 ngwee and 6 pence became 5 ngwee. At the same time, the currency
was decimalized.
The New Kwacha
Following the de facto devaluation of the U.S. Dollar on August 15,
1971, the Kwacha, through its link to the Pound Sterling fixed at
K1.7094= £1.00, began to appreciate vis-a-vis the American unit,
beginning August 23rd. On December 3rd, Zambia broke her currency's
ties to the British unit and attached the Kwacha to the U.S. Dollar,
thereby reestablishing the Official Rate of US$ 1.40, a de facto
devaluation. In the wake of the U.S. Dollar devaluation on December
18th, the Kwacha's gold content was reduced 7.89% on December 22nd,
thus paralleling the American unit's devaluation and leaving the
Official Rate unchanged. A 4.5% fluctuation range for the Kwacha was
also introduced. With the dismantling of the Sterling Area on June 23,
1972, along with the floating of the Pound Sterling, Zambia
relinquished the monetary privileges she had enjoyed as a member of
the Area. Following the U.S. Dollar devaluation in February 1973, the
Official Rate of the Zambian currency was realigned to US$1.555,
effective February 15th, based on the Kwacha's unchanged gold content.
There are no minimum reserve requirements of gold and foreign exchange
for the nation's currency. Again, a change-over period was allowed to
complete the withdrawal of Zambian £. s. d. notes and coin from
circulation and these ceased to be legal tender on January 31, 1974.
F.A.O. Numismatic Collection
In commemoration of the Food and Agricultural Organisation Day (F.A.O.),
the Bank also issued a 50 ngwee F.A.O. proof coin for numismatic
collection. Later as the need arose to bridge the gap between 20 ngwee
and the K1 note, an ordinary 50 ngwee F.A.O. coin and 50 ngwee coin of
new design were simultaneously put into circulation towards the middle
of 1971. A K20 note was also introduced during the same period
Second Republic
With the advent of the One Party Participatory Democracy, the Bank
issued a commemorative K1 note to join the rest of the nation in
celebrating the birth of the Second Republic on December 13, 1973.
Finally, the bank changed the colour of the 50 ngwee note in order to
eliminate the confusion that appeared to exist between the 50 ngwee
and the new K5 notes, hence the multi-coloured 50 ngwee note made its
first appearance in April 1974.
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