Is Zimbabwe now on the right track?

The Reserve Bank of Zimbabwe’s Monetary Policy Committee, which met on Friday last week, says the country’s monetary policy statement released on 5 April has been well received by the market and is expected to ensure lasting stability, certainty and predictability in the exchange rate and inflation.

In a statement released yesterday the central bank said that because of the initial positive reaction from the market, the MPC has resolved to maintain the current policy matrix as follows:

• To maintain the current Bank Policy rate at 20% per annum and an interest rate corridor of 11-25%;
• To maintain the statutory reserve requirements for demand deposits and savings and time deposits in ZiG at 15% and 5%, respectively; and
• To maintain the statutory reserve requirements for demand deposits and savings and time deposits in foreign currency at 20% and 5%, respectively.

Zimbabwe introduced a new currency on 5 April. The currency has been trading electronicall;y since 8 April but new notes and coins are due to be released today.

The currency, known as Zimbabwe gold or ZiG, firmed against the United States dollar until 24 April before sliding on 26 April and on 29 April but it bounced back today.

The MPC said it is going to direct the central bank to ensure that, at all times, any growth in reserve money is fully covered by reserves, in the form of gold, other precious minerals and foreign currency balances in the Reserve Bank’s Nostro account.

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