RBZ resorts to market determined exchange rate
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THE Reserve Bank of Zimbabwe has announced a range of measures to stabilise the exchange rate which include using a market-determined rate to trade foreign currency.The RBZ will from this Wednesday use an exchange rate determined by the market to sell foreign currency to banks who will in turn trade it to their customers at equally market-determined rates in a bid to contain the steep foreign currency volatilities witnessed in recent weeks.
A Monetary Policy Committee meeting held in Harare this Tuesday cited the reduction in foreign currency inflows in the country as responsible for unsettling the foreign currency market, hence the need to liberalise the trade to achieve a market-reflective exchange rate.
Furthermore, the interbank maximum trading limits will be reviewed upwards from US$100 000 to US$500 000 to increase access to foreign currency to bank customers.The bank has also with immediate effect scrapped the 90-day liquidation requirement of export proceeds to ensure the interbank forex market is self-financing.
Other measures put in place to manage demand-side factors include the upward review of the bank policy rate from 140 percent to 150 percent per annum.
The liberation of the forex market is a major paradigm shift by the RBZ to stabilise exchange rates and fine-tune operations to market forces.
