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    RBZ unveils sweeping monetary policy changes

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    Harare (New Ziana) – The Reserve Bank of Zimbabwe
    (RBZ) has announced sweeping monetary policy changes after the economy
    experienced a resurgence in exchange rate pressures since mid last
    month.

    Zimbabwe’s currency is the Zimbabwe Gold (ZiG) introduced in April this
    year.

    In a statement, the RBZ governor, Dr John Mushayavanhu said the
    pressures on the economy is reflected on the widening parallel market
    exchange rate premium and an increase in inflationary pressures.

    The monetary policy changes follow a meeting of the Monetary Policy
    Committee (MPC) to deliberate on the recent macroeconomic and financial
    developments and economic outlook.

    Following the introduction of the ZiG in April, the economy experienced
    relative stability from April with inflation averaging -0.82 percent
    until mid-August.

    However, following the resurgence in exchange rate pressures since the
    second half of August, monthly inflation increased to 1.4 percent in
    August and is anticipated to be higher September.

    “The increase in parallel market exchange rate volatility is despite the
    increase in foreign currency inflows for the first 8 months to August
    2024 of US$8.465 million, reflecting an increase of 13.4 percent
    compared to US$7.468 million in 2023,” said Dr Mushayavanhu.

    To ensure that inflation expectations remain well anchored as well as
    dissipate current inflationary pressures, Dr Mushayavanhu said the MPC
    resolved to increase the bank policy rate from 20 percent to 35 percent
    with immediate effect and increase and standardize the statutory reserve
    requirements for demand and call deposits for both local and foreign
    currency deposits from 15 percent and 20 percent respectively to 30
    percent.

    He said the statutory reserve requirements for savings and time deposits
    for both local and foreign currency have also been increased from 5
    percent to 15percent with immediate effect and allow greater exchange
    rate flexibility in line with the increased demand for foreign currency
    in the economy.

    He said MPC also resolved to reduce the amount of foreign exchange an
    individual can take out of the country from US$10 000 to US$2 000.

    “The MPC is convinced that the above measures will go a long way in
    addressing the emerging exchange rate risks, anchor the inflation
    expectations and stabilise prices in the near to short term,” he said.

    “Going forward, the MPC will remain vigilant to any emerging risks to
    ensure continued macroeconomic stability.”
    New Ziana

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