Categories: Stories

Zimbabwe re-introduces foreign currency accounts

Zimbabwe has re-introduced foreign currency accounts with immediate effect and has ordered banks to fully comply by 15 October.

This was one of the measures introduced by Reserve Bank of Zimbabwe governor John Mangudya today.

“With immediate effect, all banks are therefore directed to effectively operationalise the ring-fencing policy on Nostro foreign currency accounts by separating foreign currency accounts (FCAs) into two categories, namely Nostro FCAs and RTGS FCAs,” Mangudya said.

“Accordingly all banks are directed to use their know-your-client (KYC) principles to comply with this directive to separate the accounts without requiring their clients to complete any other documentation other than for new bank accounts.

“Banks have been provided with a period of up to 15 October 2018 to fully comply with this policy measure. Banks are also expected to provide reasonable deposit rates on the Nostro FCAs in line with international best practice on such accounts.”

Mangudya said this policy measure is 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.

“The relationship between the two categories of the FCAs shall continue to be at parity. This is essential in order to preserve value for money for the banking public and investors during the transition to a more market based foreign currency allocation system that shall be implemented once the economic fundamentals are appropriate to do so.

“As a further support to this measure and to provide credit enhancement or deposit protection for the Nostro FCAs, the Reserve Bank is finalising discussions with the African Export-Import Bank (Afreximbank) towards a US$500 million Nostro Stabilisation Guarantee Facility (NSGF) to provide Nostro FCA holders with assurance that foreign currency shall be available when required by the account holders,” he said.

“The NSGF which will be similar to the AFTRADES Facility that guarantees interbank trading in Zimbabwe is targeted to be in place by the end of October 2018.

“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.

“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.”

Mangudya also said the central bank had put in place a $500 million facility for the importation of strategic requirements that include fuel, electricity, cooking oil, wheat, and packaging, among others.

“The facilities are from Gemcorp US$250 million, Afreximbank US$150 million and Afrigrain US$100 million,” he said.

“These facilities are over and above the US$100 million from CDC/Standard Chartered Bank, US$100 million from Ecobank, US$30 million from IDC of South Africa to Agribank and US$25 million from the African Development Bank (AfDB) to CABS Building Society.”

Full monetary policy statement:

monetary-policy-statement-01-october-2018-final

(1336 VIEWS)

This post was last modified on October 1, 2018 5:48 pm

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.

Recent Posts

Reserve Bank of Zimbabwe expects more foreign currency sellers to join the interbank market

The gazetting into law of the payment of quarterly taxes on a 50-50 basis in…

December 4, 2024

Zimbabwe 2025 citizens’ budget

Zimbabwe has today unveiled a ZiG276.4 billion budget for 2025 during which it expects the…

November 28, 2024

To go or not to go- Mnangagwa in a quandary

Zimbabwe President Emmerson Mnangagwa has repeatedly stated that he is not going to contest a…

November 25, 2024

ZiG loses steam, falls against US dollar for five consecutive days

The Zimbabwe Gold fell against the United States dollar for five consecutive days from Monday…

November 22, 2024

Indian think tank says Starlink is a wolf in sheep’s clothing

An Indian think tank has described Starlink, a satellite internet service provider which recently entered…

November 18, 2024

ZiG firms against US dollar for 10 days running but people still do not have confidence in the currency

Zimbabwe’s new currency, the Zimbabwe Gold (ZiG), firmed against the United States dollars for 10…

November 16, 2024