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Zimbabwe's currency reform a step in the right direction says IMF

by FinX
09 Mar 2019 at 08:43hrs | Views
Zimbabwe's currency reform which resulted in the conversion of bond notes and all electronic money into a currency called the RTGS dollar, will mitigate the current economic woes, characterised by acute shortages of foreign currency and inflationary pressures, the International Monetary Fund (IMF) has said.

Last month, the central bank established an Interbank Foreign Currency Exchange meant to formalise forex exchange among banks and the Bureau de Changes. Government then pegged the RTGS dollar at 1:2.5 during the debutant floating of the local currency. The RTGS dollar is now part of the multi-currency basket in the southern African nation.

Responding to questions on Zimbabwe during a media briefing yesterday, IMF Communications Director Gerry Rice said little progress has been made towards addressing the fundamentals.

"And our initial evaluation of that which has been announced by the Zimbabwean authorities recently is that it's a step in the right direction to address distortions that have significantly impaired those macroeconomic outcomes that I've mentioned," he said.

Today, banks are trading the RGTS at 2.51 to the U.S. dollar. On the black market, one US dollar still costs around 3.5 bond notes and at least $4 in electronic funds.

"Of course, the currency reforms' sucess will depend on the implementation of an effective overall monetary policy framework supported by market-determined interest and exchange rates, together with prudent fiscal policies."

Source - FinX