Black market rate was falling, will new monetary policy sustain this?


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The Old Mutual Implied Rate used by business to estimate the value of the Zimbabwean currency had started falling in September showing that the business sector was gaining confidence in the Emmerson Mnangagwa administration.

The question now is: Will the re-introduction of foreign currency accounts, which some have said is a recognition that the bond note and Zimbabwe’s electronic dollar are not at par with the United States dollar, stabilise the rate or fuel it?

The OMIR which kicked the month of September at 2.6831 peaked at 3.1387 on 11 September before sliding to a low for the month of 2.4460 on 28 September.

Although Reserve Bank of Zimbabwe governor John Mangudya said the reintroduction of foreign currency accounts  was “expected to encourage exports, diaspora remittances, banking of foreign currency into the Nostro FCAs and to eliminate the commingling or dilution effect of RTGS balances on Nostro foreign currency accounts,” some Zimbabweans most of whom lost their entire savings when the country adopted the US dollar believe that this could be another way to impoverish them while at the same time enriching those with means and access to foreign currency.

Mangudya will, therefore have a lot of explaining to do to convince the ordinary Zimbabweans that this policy is good for the country.

One Insider reader commenting on the new policy said: “They have introduced a smart way of stealing US$ from unsuspecting masses, I smell a rat.”

A local businessman said though the new policy will not immediately  deal  with  the current  challenges facing the  market, it will provide confidence  and  security  to foreign  investors and exporters.

Mangudya said exporters would retain 100 percent of their proceeds and explained what he meant by foreign currency accounts.

“For the avoidance of doubt, foreign currency in the Nostro FCAs pertains to free funds, diaspora remittances, international organisations’ remittances, portfolio investment inflows, loan proceeds and export retention proceeds,” he said.

“It is also essential to note that all exporters retain 100% of their export proceeds with the exception of gold producers that retain 30% of export proceeds; platinum, diamonds and chrome 35% and; 20% for tobacco and cotton producers.”

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Charles Rukuni
The Insider is a political and business bulletin about Zimbabwe, edited by Charles Rukuni. Founded in 1990, it was a printed 12-page subscription only newsletter until 2003 when Zimbabwe's hyper-inflation made it impossible to continue printing.

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