A severe liquidity crunch is looming in the fragile financial services sector following government’s directive compelling all banking institutions to transfer to the central bank local currency balances they are holding as counterpart funds for foreign currency legacy debts amounting to about $1,2 billion.
The Reserve Bank announced in February that it would assume debts accrued by banks after the apex bank effectively reintroduced a local currency by dropping the 1:1 parity with the United States.
The monetary policy resulted in a spike in inflation and the setting up of a managed exchange rate regime.
The measure which meant to support the introduction of local currency, is expected to mop around ZWL$1,2 billion from the market and its part of efforts by the Reserve Bank of Zimbabwe to control inflationary pressures.
More to follow…
