RBZ Floats US Dollar Exchange Rate

the independent media source eraoflightdotcomThe Reserve Bank of Zimbabwe (RBZ) has liberalised the US dollar exchange rate against Real Time Gross Settlement (RTGS) balances, bond notes and all currencies in the multi-currency basket as it seeks to formalise trade in foreign currency.

The US dollars in the new market will be retained export earnings, with the remainder continued to be allocated by the Reserve Bank for essential goods and services.

Delivering the 2019 Monetary Policy Statement (MPS) yesterday, RBZ Governor Dr John Mangudya said the move would bring sanity in the foreign currency market, promote exports, boost Diaspora remittances and investments, eliminate multi-tier pricing, as well as preserve the value of local forms of money.

The RBZ had pegged RTGS balances at one-to-one with the US dollar, but shortages resulted in high premiums for US dollars outside RBZ control.

Wild swings in parallel market exchange rates in the last quarter of last year spawned a spike in prices of goods and services, propelling monthly and annual inflation rates to record levels since dollarisation of the economy in February 2009.

As such, the central bank will, with immediate effect, establish an interbank foreign exchange market to formalise trade in foreign and local currencies through banks and bureaux de change on a willing-buyer, willing-seller basis.

This entails denominating the existing RTGS balances, bond notes and coins in circulation as RTGS dollars to establish an exchange between current monetary balances and foreign currency.

Dr Mangudya said to get the US dollar equivalent of current RTGS or electronic balances, the prevailing market determined exchange rate will apply.

“This will bring fairness and transparency in the distribution of foreign currency,” Dr Mangudya said, adding that the policy measures sought to formalise what was already happening on the parallel market, which the bank had no control over.

To anchor exchange rate stability, Dr Mangudya said the RBZ will aggressively intervene in the market to sterilise liquidity so as to help contain inflationary and exchange rate pressures.

Zimbabwe has $1,8 billion usable RTGS balances out of a total of about $10 billion.


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