daniel chigunwe
Business Writer
The country’s foreign currency receipts grew 15.9 percent to US$2.4 billion in the first quarter this year compared to the same period prior year, according Reserve Bank of Zimbabwe (RBZ)’s Monetary Policy Committee (MPC) latest resolutions.
“The positive trend in foreign currency generation has seen the country realising US$2.4 billion in foreign currency receipts during the first quarter of 2022, an increase of 15.9 percent compared to foreign currency received during the same period in 2021,” the MPC statement reads.
RBZ Governor Dr John Mangudya who chairs the MPC, said the favourable current account balance was as a result of satisfactory economic fundamentals that have left the country with a stable official exchange rate.
According to the MPC statement, the stable environment has resulted in a positive growth of the real sector, public works undertaken by Government, fiscal sustainability and a tight monetary policy stance.
Dr Mangudya on why the environment is stable said; “Money supply has also remained largely under control, with reserve money remaining stable at levels of around $28 billion for the past six months, while annual growth in broad money fell from 384 percent in March 2021 to 151 percent in March 2022.”
The MPC said it noted with concern the recent uptick in month-on-month inflation, from 7.7 percent in March to 15.5 percent in April 2022, and the increase in annual inflation from 72.7 percent in March to 96.4 percent in April 2022. They noted that it was as a result of geopolitical tensions, which the country could not control.
The increase in inflation was as a result of a combination of global shocks and the pass-through effects of the recent exchange rate depreciation on the parallel market, with a significant proportion of the inflationary pressures emanating from the impact of the on-going Russia-Ukraine war.
The bank maintained the main interest rate at 80 percent still citing imported inflation, which is causing exchange rate volatility.
The Medium-Term Bank Accommodation Facility Interest Rate was reviewed from 40 percent to 50 percent per annum.
Minimum deposit rates for local dollar savings and time deposits were also maintained at 12.5 percent and 25 percent, per annum respectively.
In the same spirit, the quarterly reserve money growth target was kept at 5 percent for the quarter ending June 2022.
The Committee agreed to allow banks to continue conducting foreign exchange transactions of up to US$1 000 under an arrangement agreed upon between banks and the Bank and in terms of which individuals with free funds and entities/corporates holding foreign exchange in their foreign currency accounts.
As they continue to ensure that commercial imports are processed through normal banking channels in line with international best practice
Bongani Ndlovu