Zimbabwe’s 2019 tobacco marketing season will open on March 20, Reserve Bank of Zimbabwe Governor Dr John Mangudya told a Parliamentary Portfolio Committee today.
Tobacco is the country’s second biggest foreign currency earner, and the RBZ governor believes that the commencement of tobacco auction floors will help guide the rate for the inter-bank foreign exchange market that was introduced last month.
“Tobacco auctions will begin on March 20, and we do believe that before or on that date the rate will have reached its equilibrium,” said the governor.
The inter-bank market started operating on February 22, at an initial rate of 2,5 RTGS dollars to the United States dollars.
It was introduced to curb the illegal foreign currency market where rates had peaked at 4 for the fiat local currency to the US dollar.
Zimbabwe has been facing foreign currency shortages over the past few years, a situation that had led to the proliferation of illegal foreign currency trading.
Announcing the Monetary Policy Statement last month, Dr Mangudya said the central bank had arranged “sufficient lines of credit to enable it to maintain the foreign exchange market,” which is currently trading at a rate of around 2,5, compared to an illegal market rate of between 3,5 and 4.
“The new framework is set to bring certainty, predictability and functionality to the country’s foreign exchange market,” he said at the time.
Dr Mangudya today said Zimbabwe’s tobacco growers will retain 50 percent of their net export proceeds.
And negotiations are underway between the RBZ and tobacco growers representatives to have their foreign currency retention period to be extended to between 90 and 180 days.
2018 RECORD OUTPUT
Last year’s tobacco selling season hit a record high of 237,1 kilogrammes, as Chinese demand for flue-cured tobacco from Zimbabwe increased.
The country exports flue-cured tobacco to different parts of the world with China being the largest tobacco consumer.
With an estimated 350 million smokers, the Asian country spends around $200 million annually on Zimbabwean tobacco.
Other top buyers of flue-cured tobacco from Zimbabwe are South Africa, the United Arab Emirates, Indonesia and Belgium.