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The Reserve Bank of Zimbabwe has set the interbank rate at 2.5 to the US dollar to kick start its auction system. However its ability to sustain it at those levels depends, among others on the availability of foreign currency, the quantum of outstanding payments and their averages and fiscal discipline on the part of government. At a post Monetary Policy meeting this morning, RBZ governor said the apex bank had managed to supply banks with foreign currency as from yesterday using a rate of 2.5 to the US$ dollar. The rate was implied when the President announced new fuel prices in January. This is against the prevailing market rates of 3.5 and 4 on bond notes and Ecocash respectively. Mangudya said: “This is not a trial-run. This is the beginning of the journey. Last night, we agreed with the banks and they were buying from us (RBZ) at 2.5: 1 which include their mark-up. Today (Friday) banks are selling using the 2.5 rate, which is in line with regional best practice,” he said. “They (banks) should not make money out of our money. Banks, therefore, should not charge any rate above that. This is not acceptable. “We have given banks seed capital to kickstart interbank trading. The only challenge is that banks might not have the RTGS dollars (T$) to support it. In fact, some banks were struggling yesterday to raise T$ to purchase the forex.” Mangudya’s comments come in the wake of his policy statement, which did away with the parity between the US$ and the T$. He said rates will be published at the end of each trading day.
While giving his remarks, Finance Minister Mthuli Ncube accepted that the 1:1 cost the country dearly in the process and is regrettable. “We have lost a total of $2 billion last year on 1:1 forex exchange rate and it was killing the goose that was laying the golden eggs (the exporters). “By formalising and liberalising the exchange rate; we thought this measure will enable market and banks to lead the way as far as forex exchange rates are concerned,” said Mthuli. The bank is still working on the legal modalities and also on ways to ensure that value is protected although he said people should accept that their balances had been devalued by 2.5 times due to the conversion.
Source – FinX