RBZ commits to strengthen Interbank Market

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By Alois Vinga

THE Reserve Bank of Zimbabwe (RBZ) Governor, John Mangudya has committed to work hard in order to ensure that the country’s foreign currency requirements are met through strengthening the recently introduced interbank market.

Mangudya was speaking at a breakfast meeting, Tuesday, where he added that the current glitches affecting the smooth operations of the facility will be resolved.

“The good thing is that we all prefer to have an interbank market which is working, we are in a transition.

“We know that there is a discrepancy between the interbank rates and the parallel market and even in Nigeria which now has a functional market, such challenges were once experienced,” Mangudya said.

The Central Bank chief, said dialogue through the Tripartite Negotiation Forum will be explored in order to avoid the continuous spiraling of the exchange rates out of control by bringing workers, government and business representatives to buy into the reform agenda.

“When the RBZ provides foreign currency into the interbank market, the substantial amount that we are injecting is coming from the lines of credit, what is coming from exporters is so insignificant and are not material amounts,” said the Apex Bank boss.

Mangudya maintained that retention of foreign currency earned by exporters remained the only option for now, considering that the few available resources have to be spread across the country’s economic needs.

“In terms of gold we opt for 45% retention to make sure that those who are not exporting get access to foreign currency because if we give 100 percent to gold miners the foreign currency pool will be left with nothing and other economic sectors will struggle.

“Minerals in Zimbabwe belong to all everyone, no one put them underground and that is why you find out that some nations create sovereign wealth funds to ensure that current and future generations continue to enjoy the benefits of the minerals,” he said.

Mangudya appealed to business to have confidence in the country’s currency as which he argued will spill over to ordinary people. This will contribute to the stability of prices underscoring that foreign currency should be directed towards importation of raw materials.

The interbank market was introduced by the Central Bank in its February 2019 Monetary Policy statement as a move aimed at allowing free exchange of foreign currency in the country after years of maintaining a 1:1 exchange rate between the bond notes and United States dollar.

However, to date, while RBZ claims that around US$700 million has been traded on the market, but business argues it has not received anything.