RBZ Rules Out Dollarisation

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By Staff Reporter

HARARE – The Reserve Bank of Zimbabwe (RBZ) will set aside 5% of the foreign exchange available at the auction system to provide the necessary back-up and enhance the attractiveness of the Zimbabwe dollar, governor John Mangudya said on Monday, as he ruled out dollarisation.

 

The plan is part of a raft of measures announced by Mangudya to promote the use of the domestic currency.

 

It comes barely a week after Finance minister Mthuli Ncube said miners will pay taxes and royalties in local currency up to a maximum of 50%.

 

In his Monetary Policy Statement delivered Monday, Mangudya said the use of the local currency helped the economy to grow by 7.8% in 2021 following the increased local currency backed aggregate demand that was necessitated by increased agricultural output and expansion in Government infrastructural projects.

 

“In any case the financial system is largely constituted of local currency, with around 56% of total deposits being local currency and the balance of 44% being foreign currency deposits, which shows that there is no sufficient foreign currency liquidity to support dollarisation in Zimbabwe,” Mangudya said.

 

He increased the limit on mobile banking transactions to ZWL$25000 from ZWL$20,000 for person to business per transaction with a maximum of ZWL$100 000 per week. The limit for person to person has been doubled to ZWL$10,000 per transaction with a limit of ZW$70 000 per week.

 

Cash withdrawal for the public has been increase to ZWL$5000 per week from ZWL$2000.

 

Mangudya said RBZ will maintain the minimum deposit rates for savings and time deposits at 10% and 20%, respectively, to preserve value for local currency deposits.

 

RBZ, Mangudya said, will increase foreign exchange availability to fuel service stations designated by the Zimbabwe Energy Regulatory Authority to sell fuel in local currency.

 

RBZ maintained the bank policy rate and the Medium Term Accommodation Facility interest rate 60% and 40% in order to avoid further build-up on inflationary pass-through effects currently emanating from exchange rate indexation and the elevated global inflation pressures.

 

Mangudya maintained statutory reserve requirements for demand/call deposits and savings and time deposits at 10% and 2.5%, respectively, to promote savings and time deposits, while discouraging unproductive credit creation.

 

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