Zimbabwe’s central bank has abandoned the 1:1 official peg for the United States dollar against the local quasi-currency (the bond notes).
Announcing the Monetary Policy Statement this afternoon, Reserve Bank of Zimbabwe governor Dr John Mangudya liberaliszed foreign currency trading in the country by introducing an inter-bank foreign currency market in what he termed “managed floating.”
The move is seen as an appeasement of key players in the Zimbabwe economy who have been calling for an official foreign currency trading platform.
“The Bank has taken note of the excellent contributions from the business community, bankers, the academia, the media and members of the public on the need to establish an inter-bank foreign exchange market to formalise the selling and buying of USDs through banks and bureau de change. This is essential in order to bring sanity in the foreign currency market whilst at the same time promoting exports, diaspora remittances and investments for the good of our national economy.
“The Bank considered the implications – accounting, financial, economic, legal and social – that are embedded in the establishment of an inter-bank forex market within the context of the current national payment systems made up of RTGS, mobile payment platforms, point of sale (POS), bond notes and coins,” said the RBZ governor.
*Access the Full Monetary Policy Statement here: https://www.rbz.co.zw/index.php/monetary-policy
“After taking account of the implications and putting in place safeguards to maintain stability in the fares market, the Bank is, with immediate effect, establishing an inter-bank foreign exchange market in Zimbabwe to formalise the trading of RTGS balances and bond notes with USDs and other currencies on it willing-buyer willing-seller basis through banks and bureaus de change.”
Local economists have long called for the RBZ to set up an inter-bank market that would allow the country’s importers and exporters to trade foreign currency, and determine a sustainable rate of exchange and more efficient allocation of hard currency.
Zimbabwe introduced the bond notes around 2016, which quickly devalued against the United States dollar on the parallel market despite the government maintaining the 1:1 official rate.