Story by Owen Mandovha
Measures implemented by the Reserve Bank of Zimbabwe (RBZ) have cooled off exchange rate volatility, providing stability to the ZiG currency over the past five months.
Almost four months after its introduction in April 2024, the ZiG was fast losing value as the yawning gap between the official rate of 13.56 to the greenback and the parallel market rate which was hovering between 40 and 50 to the United States dollar prompted monetary authorities to devalue the ZiG to 23.56.
This was followed by the upward review of the statutory reserve requirements among a host of other interventions to quell emerging inflationary pressures and exchange rate volatility.
The local currency has remained largely stable in the last quarter of the year 2024 as explained by financial economist Mr Batanai Matsika.
“The liquidity management measures introduced by the central through a tight monetary policy stance speaks to the ongoing macroeconomic stability and it is essential to mention the interventions made by the RBZ to contain money supply growth which was a threat to the exchange rate stability. The ensuing liquidity crunch is also explained by this stance due to increased statutory reserve requirements though we can see a local currency that has largely remained stable for some time,” he said.
Economist Dr Prosper Chitambara echoed the same sentiments saying the liquidity management framework has contained inflationary pressures as manifested in exchange rate stability.
“Of course the pursuit of a tight monetary policy has largely seen contained liquidity in the economy as pledged by the RBZ governor Dr John Mushayavanhu and over the last four or five months the ZiG has been very stable evening gaining on the parallel market,” he said.
The monthly local currency marginal gains have provided an environment of stability in the economy, a key variable for business and industry to operate sustainably.
