Zimpapers Logo

Natasha Chamba, Business Reporter

RESERVE Bank of Zimbabwe (RBZ) deputy governor Dr Kupukile Mlambo has called on Zimbabweans to embrace the reference RTGS dollar for domestic transactions and reduce pressure on foreign currency requirements for the economy. 

This comes at a time when demand for foreign currency has remained high across various business sectors after the Central Bank earlier this year abandoned the 1:1 rate for United States dollars against the RTGS dollar. 

Speaking to senior business executives at a Confederation of Zimbabwean Industries annual general meeting recently, Dr Mlambo, said for people to gain confidence in the local currency, the industry sector should work closely with Government in implementing fair pricing practices and eliminating “speculative, arbitrage and rent seeking behaviour”. 

He said co-operation between the productive sector and Government was paramount in boosting consumer confidence and eliminating uncertainty on the foreign exchange market while bringing stability of the local dollar. 

“I would like to bring to your attention that the bank (RBZ) has adopted and is in the process of implementing a monetary targeting framework aimed at stabilising prices (low and stable inflation) . . . the focus will be on reserve money targeting with a view to stabilising inflation and building credibility,” Dr Mlambo said. 

The deputy governor said the measures taken by the Central Bank to liberalise the foreign exchange market through the “willing-seller, willing-buyer” principle, coupled with the injection of US$500 million liquidity into the interbank system, would go a long way in bringing stability to the foreign exchange market.

He said efforts by Government on the interbank are meant to anchor stability of the formal exchange rate. 

In the past week, parallel market rates have been depreciating to a rate of USD$1: RTGS$6 from rates as high as USD$1: RTGS$9. 

Government has been addressing key economic fundamentals under its Transitional Stabilisation Programme (TSP) and blamed indiscipline among business players for driving speculation.

“Government is taking bold measures that are likely to correct current pricing distortions in the economy and restore confidence in the economy and the financial markets,” Dr Mlambo said. 

The deputy governor also said Government had reduced fiscal deficit for the first time in years with Treasury already recording a budget surplus since beginning of the year. 

Government has also been discouraging pricing of domestic goods and services in foreign currency while stressing the need to manage and reduce the country’s import bill.

— @queentauruszw