RBZ induces foreign currency stability

Source: RBZ induces foreign currency stability | Sunday Mail

Brian Chitemba

THE Reserve Bank of Zimbabwe (RBZ) has so far traded US$40 million on the interbank market, as part of the drawdown from a US$500 million facility availed last week, raising high expectations of foreign currency exchange rate easing down as the week progresses.

The foreign currency situation is anticipated to cascade down and in turn arrest the rising prices of goods and services.

RBZ governor Dr John Mangudya, told The Sunday Mail yesterday that between Tuesday and Friday, US$40 million moved to the interbank market on a willing-buyer willing-seller basis. The interbank market was reintroduced in February this year to allow business to access foreign currency on the official market through trading on a willing-buyer willing-seller platform.

However, individuals and companies were not fully accessing the hard currency and the US$500 million injection has brought fresh hope.

Dr Mangudya said foreign currency was available for key sectors such as fuel and oil producers — to ensure stability on the market.

“Stability has returned to the foreign currency market and just from Tuesday, we have drawn down and sold US$40 million to the interbank market. We have seen that the foreign currency trades are going on well and the situation is stabilising,” he said.

“Zimbabwe depends on foreign currency for a lot of goods and services, therefore, it’s important to ensure that there is stability. I can safely say we are in transition to stability.”

Dr Mangudya said the stabilisation of the interbank market was evident on the ground particularly in the oil producers sector.

“I would give an example of cooking oil producers which are accessing foreign currency and producing to such an extent that they are flooding the market. This shows that there is not going to be shortages of such basic commodities on the shelves,” he said.

“The same goes for fuel importers; foreign currency to buy the fuel is available and we are returning to adequate supplies on the market. All this is proof that we are marching towards stability.”

Confederation of Zimbabwe Industries president Mr Sifelani Jabangwe said the foreign currency willing-buyer willing-seller had opened up more access to the United States Dollars by business.

He added that the economic fundamentals were right for a stable economy as there was US$800 million in Nostro accounts while Real Time Gross Settlement (RTGS$) stood at $1,2 billion plus $500 million in Bond notes.

Mr Jabangwe explained that with the $1,7 billion (RTGS$ and Bond notes) bank balances versus the Nostro balances of US$800 million could not justify the foreign currency exchange rate of US$1: RTGS$7.

“Even if we add about $800 million in Treasury Bills which are about to mature, bringing the local trading currency at $2,5 billion; the foreign currency exchange rate should be around US$1: 3 RTGS$,” he said.

Mr Jabangwe said it was feasible to bring down the exchange rate because the Nostro bank balances at US$800 million were the highest since 2008, indicating that there was positive growth in the economy.

“What is needed now is to build confidence in the economy and the market should be aware of the RTGS$ and Bond balances versus the USD Nostro accounts which shows that the rate must certainly come down,” he said.

Mr Jabangwe also said CZI and other business member organisations will meet the Employers’ Confederation of Zimbabwe (EMCOZ) tomorrow to find ways of bringing economic stability.

Last week, technocrats drawn from banking, retail, agriculture and mining sectors agreed to implement short-term measures to stabilise the economy.