Zimbabwean Bond Notes/Bloomberg

Economy

Zimbabwe to supply interbank market with $500 million

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The central bank implemented the system earlier this year as chronic foreign exchange shortages had caused limited supplies of fuel and wheat, two key imports and it has caused inflation to accelerate at its fastest rate since 2008.

Monday 20, May 2019

(Bloomberg) --Zimbabwe will supply the interbank foreign exchange market with $500 million this week as it tries to resuscitate a currency trading system implemented in February that is been plagued by a lack of liquidity.

In February, the central bank created the interbank market and said its quasi-currency, known as RTGS, would no longer be pegged to the dollar but would be allowed to trade at fair value on the market.

However, a lack of available dollars has meant that it’s been little used and its rate of 3.45 to the dollar is well below the black-market rate of seven and the quasi-currency, now known as RTGS dollars, is not traded outside Zimbabwe.

John Mangudya, the Governor of the Reserve Bank of Zimbabwe, said, “This amount shall go a long way to stabilise the exchange rates, prices of goods, as well as services and the money, will be drawn from the central bank by the government.”

While the system was welcomed by business the shortages have persisted.

 

TAGS : RTGS$, Reserve Bank of Zimbabwe, John Mangudya, President Emmerson Mnangagwa

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