HARARE – Zimbabwe’s central bank kept its benchmark interest rate unchanged at its first policy meeting since unveiling the gold-backed currency, the ZiG.
Governor John Mushayavanhu said in a statement that the monetary policy committee had held the rate at 20 percent after receiving positive market reaction to the new currency.
According to Mushayavanhu, the MPC expects currency reforms to help provide “stability, certainty and predictability in the exchange rate and inflation”.
The MPC also set the interest rate corridor at between 11 percent to 25 percent, Mushayavanhu said.
The southern African nation introduced ZiG, short for Zimbabwe Gold on 5 April.
The currency is backed by 2.5 tons of gold and $100 million in foreign currency reserves held by the central bank. On the same day, the central bank reset interest rates from 130 percent, a world record, to 20 percent. Meanwhile, banks in Harare began distributing the freshly minted notes and coins on Tuesday morning.
Concerns have been raised about the role of forex dealers in perpetuating financial instability, prompting monetary authorities to impose weekly cash withdrawal limits. Individuals are restricted to withdrawing up to ZiG 3,000, while companies are limited to ZiG 30,000.
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