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Mangudya to present a clear roadmap on currency reforms

by Staff reporter
19 Feb 2019 at 16:48hrs | Views
The Reserve Bank of Zimbabwe may unveil the measures in its Monetary Policy Statement to be announced on Wednesday, said the official, who asked not to be identified because he's not authorised to speak to the media.

According to a report in Zim Techreview, the Monetary Policy Statement tomorrow, is expected to, in the very least, present a clear roadmap on currency reforms.

The Reserve Bank of Zimbabwe governor Dr John Mangudya is expected to announce the introduction of an interbank foreign currency auction system, but which has to be preceded by the repealing of certain sections of the law, which give existence to the bond note parity with the US dollar.

Depreciating the so-called bond notes would be an acknowledgement that the official one-for-one exchange rate is no longer sustainable. It would also mark the second major overhaul to Zimbabwe's currency regime since October, when the central bank ordered lenders to separate deposits of US dollars and electronic money known as RTGS$.

The decision to adjust the value of bond notes follows submissions by the business community, company officials and individuals about how to formalise foreign-exchange trading in Zimbabwe, the official said. The government supports the move because it accepts the official one-for-one peg to the dollar isn't working, he said.

Bond notes currently trade at 3.61 per dollar on the black market, according to marketwatch.co.zw, a website run by financial analysts. RTGS$ are valued at about 3.75 per dollar, it said.

Zimbabwe introduced the bond notes in 2016 to ease a crippling shortage of cash. Their debut came seven years after the nation scrapped its own currency in the wake of hyperinflation and adopted a basket of foreign units as legal tender.

While the government says bond notes are equal to the US dollar, they're not accepted by foreign suppliers. That's resulted in payment problems for companies such as gold miners and grain millers.

Shops charge customers different prices depending on which unit they use to pay, offering big discounts to those who use real US dollars.

At the last MPS last year, Mangudya announced a facility to which would be similar to the AFTRADES facility, which will guarantee interbank trading in Zimbabwe.

Expectations are that he will announce a similar facility to provide a steady supply of forex to the banks. The market also expects him to lay out measures that will preserve value for banking customers, in a way that would not be reminiscent of the 2009 transition to dollarisation.


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