Online Reporter
Judith Phiri, Business Reporter
The Reserve Bank of Zimbabwe (RBZ) has said its monetary policy stance for the first half of 2025 will be based on a number of policy measures and considerations and will aim to consolidate stability and support economic growth.
The 2025 Monetary Policy Statement, issued under Section 46 of the Reserve Bank of Zimbabwe Act [Chapter 22:15], comes at a time when the economy is experiencing relative inflation and exchange rate stability.
In 2025 Monetary Policy Statement at a glance on Thursday, RBZ Governor Dr John Mushayavanhu said the stability reflects the tight monetary policy stance maintained by the central bank during the last quarter of 2024, following the upward review of the Bank Policy Rate and statutory reserve requirements.
In terms of the policy measures and considerations, he said: “In order to guarantee continued stability in the interbank foreign exchange market through augmenting the supply of foreign currency, as well as building the critical foreign currency reserves needed to anchor the ZiG, the foreign currency retention level for exporters has been reduced from 75 percent to 70 percent, with immediate effect.”
Dr Mushayavanhu said this implies that the effective surrender portion of export proceeds has been increased from 25 percent to 30 percent.
He said exporters with no immediate use of the Zimbabwe Gold (ZiG) equivalent for the additional 5 percent export proceeds surrender requirement will have an option to invest in a US Dollar Denominated Deposit Facility (USDDDF) at the Reserve Bank which they can withdraw in ZiG on demand at the prevailing interbank exchange rate on the settlement date.
The Governor said the RBZ was further refining and clarifying the interbank foreign exchange trading guidelines to authorised dealers.
Dr Mushayavanhu said: “The 5 percent trading margin as communicated in the previous interbank foreign exchange trading guidelines issued at the inception of the Willing-Buyer Willing-Seller Foreign Exchange Trading Arrangements on 3 May 2024, was only applicable for the determination of the starting exchange rate, following the introduction of the new currency, ZiG. Accordingly, authorised dealers are expected to on-sell foreign exchange purchased from willing sellers, including the Reserve Bank, at a margin consistent with international best practices.”
He said the limits on funds that can be accessed from the foreign exchange interbank market that had been set at US$500 000 and US$100 000 for primary and secondary users of foreign exchange, respectively, per week, per entity as stated in Section 3.1 of Exchange Control Circular 4 of 2022, have been removed, with immediate effect.
Dr Mushayavanhu said the central bank will issue streamlined foreign exchange interbank market guidelines to operationalise the refinements on the exchange rate management system and removal of foreign exchange trading limits.
He added: “In order to promote the use of the prepaid international debit and credit cards, the Reserve Bank has, with immediate effect, reviewed upwards the annual limit from US$500 000 to US$1 000 000. This review will also enhance the ease of doing business and reduce the use of foreign currency cash for cross-border transactions.”
The Governor said the single currency and the overall foreign exchange risk exposure limits are critical risk management tools for managing foreign exchange exposures of banks.
He said these limits are prescribed under the Banking Regulations S. I. 205 of 2000 at 10 percent and 20 percent of net capital base, respectively.
“However, as provided under the Banking Regulations, the Reserve Bank has been granting temporary exemptions on a case-by-case basis given the multicurrency framework and its impact on the banking institutions’ balance sheets,” he said.
“In order to allow ZiG to gain prominence in the multicurrency system and align with the prescribed foreign currency exposure limits under the Banking Regulations, the Reserve Bank will set upper limits to facilitate winding down, by banking institutions, that are currently over-exposed in foreign currency.”
