Story by Stanley James, Business Editor
THE Reserve Bank of Zimbabwe (RBZ) has assured the public of exchange rate stability as gold reserves backing the ZiG have increased to a value of over US$450 million from US$375 million in June this year.
As Zimbabwe experienced an adjustment in the exchange rate of the ZiG on the 27th of September, to around Zig25 per US$1 from around Zig14, debate has of late centred on the structured currency’s ability to stabilise and sustain economic requirements.
Central Bank Governor Dr John Mushayavanhu this Thursday told the ZBC News that the exchange rate movements can not be described as devaluation but a response to market forces within the willing buyer and seller foreign exchange market.
“First and foremost, what happened can not be described as devaluation. It was just a manifestation of the event on the ground where the parallel market had just set its agenda, including the retail sector and all the other economic agents in the economy,” he said.
Dr Mushayanhu explained that the central bank has further instituted fresh mechanisms to foster stability of the domestic currency.
“As the central bank, we remain committed to economic stability in anchoring economic growth. I am not expecting any further movements in the exchange rate. Let me give you some figures. As of yesterday, total deposits in this whole market were ZiG10,7 billion reserves, and our foreign reserves were US$450 million,” he added.
He also clarified the difference between gold-linked and backed currency.
“Let me emphasise that, indeed,, our currency is backed by gold and other precious metals, and the foreign currency balances that we have with the Federal Reser,ve, there is a difference between backing a currency with gold and linking a currency to the prices of gold.”
The central bank has therefore pledged commitment to sustaining the needs of the economy in line with aspirations to facilitate a stable currency.
