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