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Business Reporter
THE Reserve Bank of Zimbabwe (RBZ) is set to inject US$50 million into the interbank foreign exchange market to assist banks fund key imports and ease the demand for foreign currency that has been building against limited supply.
This intervention will supplement forex liquidity from banks under the willing-buyer willing-seller (WBWS) trading arrangement.
“Since our involvement in the interbank market, we have successfully supplemented the supply of foreign currency by authorised dealers to meet the increasing demand from economic agents,” RBZ Governor Dr John Mushayavanhu said in a statement.
The central bank chief said in recent weeks, the apex bank had observed a significant build-up in pipeline demand for foreign currency at banks, which has necessitated the strategic intervention.
“To address the current pressure, the RBZ is injecting over US$50 million into the interbank foreign exchange market, with the injection guided by the observed pipeline demand as of July 25, 2024,” he said.
The move aligns with the bank’s April 2024 monetary policy measures that introduced the new domestic currency, which sought to strengthen the currency’s stability and wide acceptance in the market.
Dr Mushayavanhu said RBZ had been building foreign reserves, which now provide a robust cover, standing at about four times the reserve money.
Economist Mr Tinevimbo Shava said the decision to inject substantial foreign currency into the market was a positive step towards stabilising the ZiG and managing inflationary pressures.
“It indicates a proactive approach in addressing liquidity challenges and ensuring that the foreign exchange market functions efficiently.
“The sustainability of this intervention will depend on continuous foreign currency inflows and prudent fiscal management.”
Online Reporter