By Alois Vinga
RESERVE Bank of Zimbabwe (RBZ) says it will introduce a new currency in the next 14 days in efforts to increase the availability of scarce physical money in a country that is battling myriad economic problems.
Addressing the media after presiding over the Monetary Policy Committee (MPC) in Harare Tuesday, RBZ governor John Mangudya said a new set of coins and notes will soon come into circulation.
“We will be introducing new $2 and $5 coins and there will also be the note versions of these two denominations. However, they will not be bond notes but will be equivalent to the bond notes.”
Mangudya said the decision was arrived at by the MPC after noting physical cash in the economy was inadequate to meet transactional demand.
He said the current proportion of cash to broad money supply of 4% is low compared to regional and international levels of 10 to 15 %.
The committee also noted the need to review upwards the cash withdrawal limits to ease the burden on the transacting public.
The additional cash injection will be carried out through the non-inflationary exchange of RTGS money for physical cash.
The MPC also agreed that the efficiency of the interbank foreign exchange market remains a critical variable for the stabilisation of the exchange rate hence the need for deepening and widening interbank market trading activities so as to attain the desired efficient operation of the market.
Added the governor, “This should ensure a stable exchange rate and efficient foreign exchange allocation through the market.
“We took note that to ensure transparency and effective monitoring, the Reserve Bank will shortly introduce the Reuters system for foreign exchange trading by all banks.
“Furthermore, the Committee underscored the need for banks to put available foreign exchange balances on the market for trading purposes.
“In this respect, the Reserve Bank will also make efforts to increase the flow of foreign exchange to the market.”
Concerns on the rate of inflationary pressures were raised but optimism was expressed inflation rates will continue to recede as attested by the recent decline in monthly inflation from 39.26% in June 2019 to 18.07% in August and further to 17.72% in September 2019.
A monthly rate of 10-12% is projected for the year end.