News / National
Mthuli Ncube assures Zimbabweans amid ZiG volatility concerns
12 Oct 2024 at 11:22hrs | Views
Finance Minister Mthuli Ncube has reassured Zimbabweans that there is no cause for alarm regarding potential volatility of the Zimbabwe Gold (ZWG) currency, citing the country's balanced local currency and United States dollar reserves. His remarks follow a period of significant exchange rate depreciation between August and September 2024, during which the official exchange rate lagged behind the parallel market rate, peaking at over US$1 compared to the official rate of US$1.80.
This sharp depreciation led many retailers to prefer transactions in US dollars, effectively sidelining the local currency. However, recent measures implemented by the government have resulted in a cooling off of prices for many basic commodities, restoring some stability to the market.
Speaking on the sidelines of the Women's Prosperity Conference, Ncube stated that citizens need not worry about further volatility, as Treasury records show a healthy balance. "At the current exchange rate of US$1, we have enough reserves to cover the entire ZWG deposits in our banking sector," he explained. He highlighted that local currency deposits amount to ZWG10 billion, while the value of reserves stands at US$425 million. When calculated at the prevailing exchange rate, this also equates to ZWG10 billion, indicating a solid backing for the currency.
Ncube emphasized that the country has ample cover for the ZWG, minimizing any potential pressure on the exchange rate. "That's what we want to assure the Zimbabweans on," he asserted, adding that the Reserve Bank of Zimbabwe (RBZ) has taken steps to mitigate speculative demand for foreign currency by raising interest rates and adjusting reserve requirements for lenders.
These measures are designed to bolster the local currency and discourage speculative borrowing, aiming to strengthen Zimbabwe's economic stability in the face of recent challenges. Ncube's statements aim to instill confidence among citizens and restore faith in the country's financial system.
This sharp depreciation led many retailers to prefer transactions in US dollars, effectively sidelining the local currency. However, recent measures implemented by the government have resulted in a cooling off of prices for many basic commodities, restoring some stability to the market.
Speaking on the sidelines of the Women's Prosperity Conference, Ncube stated that citizens need not worry about further volatility, as Treasury records show a healthy balance. "At the current exchange rate of US$1, we have enough reserves to cover the entire ZWG deposits in our banking sector," he explained. He highlighted that local currency deposits amount to ZWG10 billion, while the value of reserves stands at US$425 million. When calculated at the prevailing exchange rate, this also equates to ZWG10 billion, indicating a solid backing for the currency.
Ncube emphasized that the country has ample cover for the ZWG, minimizing any potential pressure on the exchange rate. "That's what we want to assure the Zimbabweans on," he asserted, adding that the Reserve Bank of Zimbabwe (RBZ) has taken steps to mitigate speculative demand for foreign currency by raising interest rates and adjusting reserve requirements for lenders.
These measures are designed to bolster the local currency and discourage speculative borrowing, aiming to strengthen Zimbabwe's economic stability in the face of recent challenges. Ncube's statements aim to instill confidence among citizens and restore faith in the country's financial system.
Source - NewZimbabwe
