By Revesai Mavetera
In a move to try and stabilize the exchange rate and address the recent foreign currency volatilities, the Reserve Bank of Zimbabwe (RBZ) has announced a series of measures aimed at achieving a market-reflective exchange rate. These measures, which include the use of a market-determined rate for trading foreign currency, were unveiled during a Monetary Policy Committee meeting held in Harare on Tuesday.
The RBZ will begin utilizing an exchange rate determined by the market to sell foreign currency to banks, who will then trade it to their customers at equally market-determined rates. By adopting a market-based approach, the central bank aims to contain the recent fluctuations in the foreign currency market, which have been largely attributed to a reduction in foreign currency inflows.
One of the key changes introduced is an upward revision of the interbank maximum trading limits. The previous limit of US$100,000 will be increased to US$500,000, allowing bank customers greater access to foreign currency. This adjustment seeks to enhance liquidity and facilitate smoother transactions in the foreign exchange market.
Additionally, the RBZ has eliminated the 90-day liquidation requirement for export proceeds with immediate effect. This move is designed to ensure that the interbank forex market becomes self-financing, promoting a more efficient allocation of foreign currency resources.
To manage demand-side factors and further support exchange rate stability, the bank has raised the bank policy rate from 140 percent to 150 percent per annum. This adjustment aims to influence borrowing costs and encourage responsible financial practices
