John Mangudya, Governor of the Central Bank of Zimbabwe/Bloomberg

Economy

Zimbabwe’s central bank plans to further weaken the new currency

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Zimbabwe is facing a shortage of US dollar that has resulted in shortages of fuel, drugs and food.

Tuesday 12, March 2019 BY KUDAKWASHE MUZORIWA

The Governor of the Reserve Bank Zimbabwe (RBZ) said that the exchange rate for the new transitional currency is unlikely to remain at 2.5 per U.S. dollar by the time tobacco auctions open next week, suggesting the local unit will be devalued further.

John Mangudya, the Governor of the RBZ, said that the official exchange rate was expected to change by the time auctions for tobacco, Zimbabwe’s second-largest earner of foreign currency after mining, open on 20 March.

The central bank scrapped its discredited 1:1-dollar peg for surrogate bond notes and electronic dollars last month, merging them into a lower-value transitional currency called the RTGS dollar, which has been stuck at a rate of 2.5 against the greenback.

The Governor maintained that the market would determine the exchange rate, after accusations of manipulation by the central bank, ruling out a sharp devaluation, which fuels annual inflation.

The government is projecting average annual inflation to fall between 10 to 15 per cent by the end of this year. 

Zimbabwe received $985 million from pan-African banks against future gold export earnings, last week and it will repay $5 million every month, reported Reuters.

 

TAGS : RBZ, President Emmerson Mnangagwa, RTGS dollar, RTGS $, bond notes

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