Zimbabwe to switch to managed float exchange rate -finance minister

Finance Minister Mthuli Ncube. (Picture: Newzimbabwe)

HARARE (Reuters) – Zimbabwe will adopt a “managed float” exchange rate regime, Finance Minister Mthuli Ncube said on Wednesday, abandoning strict control of foreign exchange by the central bank as it battles a growing economic crisis.

The central bank has controlled the interbank forex trading market, which was introduced in February 2019. But failure to free it up has the gap between black market and official exchange rates widen.

  1. The setting up of a Currency Stabilisation Task Force which will be spearheaded by the Ministry of Finance and Economic Development and the Reserve Bank of Zimbabwe, and will include members of the Monetary Policy Committee (MPC) and the Presidential Advisory Council (PAC).
  2. The establishment of an electronic forex trading platform based on the Reuters system to allow the foreign exchange to be traded freely amongst the banks and permit a true market exchange rate to be determined.
  3. The Liberalisation of the trading rules of the Bureaux de Changes so that they can conduct a wider range of transactions.
  4. The Reserve Bank of Zimbabwe (RBZ) will monitor the daily exchange rate and intervene as necessary.
  5. The Ministry of Finance will maintain cash budget framework to minimise fiscal deficit.
  6. Treasury will underpin the use of the Zimbabwe dollar by implementing the payment of all taxes, duties, fees and other government charges using the local currency in a phased but time-bound manner.
  7. RBZ to introduce new regulations covering mobile money platforms in order to deal with unscrupulous businesses that are illegally trading in foreign exchange thereby undermining the economy.