Home Zimbabwe News RBZ implements measures to support local currency

RBZ implements measures to support local currency

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The Reserve Bank of Zimbabwe (RBZ) says it will implement a raft of measures to support and strengthen the local unit of account following the gazetting of statutory instrument 142 of 2019 issued by the Minister of Finance and Economic Development, Professor Mthuli Ncube today.

In a statement, the central said all banks should transfer to the RBZ the RTGS/ZWL$ that they are holding as counterpart funds for foreign currency historical or legacy debt that the government, through the apex bank is assuming at the rate of 1:1 between the RTGS and the US dollar.

The RBZ Governor Dr John Mangudya said the move is expected to mop up around ZWL$1.2 billion from the market within a week.

He said the central bank will adjust the interest rate overnight window upwards from the current 15 per cent per annum to 50 per cent per annum in line with inflation trends, adding that the RBZ will remove administrative limits on the operation of bureaux de change and on the cap on margins for banks for interbank foreign exchange transactions.

Dr Mangudya highlighted that the RBZ will put a vesting period of 90 days on disposal of dual listed securities and shares purchased by investors on the Zimbabwe Stock Exchange.

He also said the central bank will increase the supply of foreign currency into the interbank foreign market by ensuring that at least 50 per cent of the surrender portion of forex is sold to the interbank market.

The RBZ boss noted that this will be supplemented by the use of Letters of Credit (LCs) for the importation of essential commodities like fuel, wheat and cooking oil, adding that the central bank has put in place LCs amounting to US$330 million for this purpose.

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Source – ZBC