It’s a stimulus package- Mangudya says

Mangudya said the Central Bank did not envisage injecting the equivalent of $200 million in bond notes into circulation. Out of a possible $50 million worth of bond coins introduced in December 2014 to ease the problem of small change, the RBZ had to date issued the equivalent of $15 million into the market, Mangudya said. He said the bond notes, to be printed in Germany, were currently at the design stage.

The central bank also announced that it had imported $15.5 million on Friday, to be injected into circulation.

Zimbabwe had $4.754 billion in circulation at the end of January 2016, according to RBZ data.

The governor said the move to split export proceeds into United States dollars, South African rand and euros was meant to remove the concentration risk brought by the overwhelming use preference of the greenback to other units in the multi-currency basket.

Upon dollarization in 2009, US dollar and rand use was at an even 49 percent. Currently, the greenback dominates with 95 percent of all transactions.

Mangudya lamented the dominance of the US dollar, which has gained as much as 20 percent against Zimbabwe’s main trading partner South Africa’s rand, saying it was detrimental to the country’s fragile economy.

“The US dollar is now more than a medium of exchange; it’s now a store of value, an asset, a commodity. If you’re not a safe haven economy, don’t be too open,” Mangudya said.

Meanwhile, in yet another policy tweak, Mangudya said tobacco farmers and small-scale miners would now be exempted from having their earnings automatically converted into rand and euros.-The Source

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This post was last modified on May 9, 2016 8:57 pm

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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.