The Reserve Bank of Zimbabwe (RBZ) is set to inject US$50 million into the interbank foreign exchange market. This move aims to bolster bank funding for crucial imports and alleviate the growing demand for foreign currency amidst limited supply.
The central bank’s intervention will complement the existing willing-buyer willing-seller (WBWS) trading system used by banks.
RBZ Governor Dr John Mushayavanhu explained that the bank has observed a recent surge in foreign currency demand among economic agents. To address this pressure, the RBZ is injecting over US$50 million into the interbank market, based on demand data from July 25, 2024.
Also read: ZiG Stabilisation Key Focus of 2024 Mid-Term Fiscal Policy
This action aligns with the bank’s April 2024 monetary policy, which introduced the new domestic currency and prioritized currency stability.
Dr Mushayavanhu also emphasized that the RBZ has been building foreign reserves, which currently stand at approximately four times the reserve money.
Economist Tinevimbo Shava commended the decision as a positive step towards stabilizing the Zimbabwean dollar (ZiG) and mitigating inflationary pressures.
Shava noted that the intervention demonstrates a proactive approach to addressing liquidity challenges and ensuring the efficient functioning of the foreign exchange market.
However, the economist also emphasized the importance of sustained foreign currency inflows and sound fiscal management for the long-term success of this measure.
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