Dr. John Mushayavanhu, the newly appointed Governor of the Reserve Bank of Zimbabwe (RBZ), is set to unveil the highly anticipated 2024 Monetary Policy Statement (MPS) this afternoon.
Expectations are high that the central bank chief will introduce policy measures aimed at stabilizing the domestic currency and curbing the escalating inflation.
Dr. Mushayavanhu will deliver his inaugural MPS after assuming office officially last week. The policy’s release, typically expected by the end of February, was delayed to facilitate broader consultations.
Dr. John Mushayavanhu’s tenure commences amidst persistent depreciation of the Zimbabwe dollar, necessitating frequent adjustments to prices, tariffs, and service charges by all economic stakeholders.
The Confederation of Zimbabwe Industries warns that currency depreciation imperils the survival of the domestic currency, making the business environment challenging.
Businesses and individuals alike hope the new central bank chief will announce measures swiftly restoring the domestic currency’s value preservation function.
Among anticipated MPS solutions is the structured currency proposed by President Mnangagwa in February, aiming to address currency stability.
However, Monetary Policy Committee member Mr. Persistence Gwanyanya clarifies that the MPS encompasses various monetary issues beyond the structured currency, including measures to regulate money velocity, circulation quantity, and interest rates.
Analysts believe the new currency, potentially a combination of fiat and asset-backed currency, should stabilize the domestic currency and the economy overall.
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Zimbabwe’s economy has grappled with exchange rate instability since the early 2000s when multilateral lenders ceased credit extensions due to loan defaults.
Dependency on imports and the economic embargo exacerbated currency pressures, hindering the implementation of currency defense measures.
Despite recent decreases in exchange rate premiums, CZI reports worrying Zimbabwe dollar depreciation rates, contributing to a challenging investment environment.
Policy interventions like hiking interest rates and directing payments in local currency aim to restore macroeconomic normalcy.
Harare-based economist Mr. Brains Muchemwa stresses the need for bold actions to create demand for the domestic currency, suggesting mandatory payment of taxes in local currency to bolster its value.
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