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'Zimbabwe's new currency system adequately funded'

by Bloomberg
28 Jun 2020 at 18:44hrs | Views
Zimbabwe has sufficient foreign currency reserves to sustain the reintroduced foreign currency auction system, the state-run Sunday Mail reported, citing Central Bank Governor John Mangudya.

Mangudya said local lenders have almost $1 billion in their Foreign Currency Accounts (FCA).

"It's about sufficient resources utilization of resources," Mangudya was quoted as saying in the Harare-based newspaper.

"The first thing is that we do not expect the exchange rate to continue to go up because there is now a formal market of foreign exchange," he said.

The Southern African country reintroduced the foreign currency system for the first time in 16 years on June 23 in a bid to halt the local currency rout that was reintroduced a year ago.

"Just to put things into perspective, the interbank system which we tried earlier in the year failed because the banks could not trade among themselves due to counter party limits, as well as issue of de-risking," he said.

"The exchange rate will be driven by effective demand from corporates," he said. He added that he expects "the exchange rate to stabilize at a level which allows users of of foreign exchange to price their goods and services appropriately, while at the same time providing good value for money for exporters."

On a monthly basis, Zimbabwe exports $350 million to $400 million, and receives $50 million to $60 million as remittances from abroad.

Source - Bloomberg

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