Business reacts to monetary policy

THE ZIMBABWE National Chamber of Commerce (ZNCC) says by introducing a separate account for foreign currency through the monetary policy statement yesterday, the central bank has finally de-dollarised the economy.


Reserve Bank of Zimbabwe governor John Mangudya announced the split of existing foreign currency accounts (FCAs) into two: an account for foreign currency transaction (nostro FCAs) and another for local bond notes and RTGS (real time gross settlement) transactions.

ZNCC chief executive officer Christopher Mugaga said the measures showed that Mangudya had finally accepted that the US dollar and the bond notes were not at par.

“It was quasi de-dollarisaion if you look at what he did. He separated nostros and RTGS,” Mugaga said.

“My question is: how is he going to operationalise the two if the rate is 1 as to 1? It’s a defacto de-dollarisation. He did it by testing the waters with one leg knowing that it might be too risky to throw them in at once,” he said.

“The advantage of what he did is that it can allow him to put effort on the RTGS, especially the issue of broad money. Remember, he is dealing with unproductive money. If you look at it, broad money supply grew by 43% year-on-year because we are creating money which does not correlate with economic growth.”

Mugaga applauded Mangudya for introducing the auctioning system for the Treasury Bills (TBs), adding this would resolve the issue of superficial bank profits.

“This will self-correct the income statements of banks. Total profit will be wiped away. The auction system will reflect the risk value of TBs because they are a risk asset,” he said.

Confederation of Zimbabwe Industries president Sifelani Jabangwe said the proposed US$500 million facility over and above other facilities would help in nostro stabilisation.

“We are just analysing it, but I think the challenge has been acknowledged. The key issue of nostro stabilisation will help us to move from the forex problem. The separation of FCA will help exporters to retain their foreign currency,” Jabangwe said.

He said the introduction of statutory reserves at a level of 5% on RTGS FCAs on a weekly basis would help reduce the amount of liquidity in circulation and bring down the exchange rate.

Confederation of Zimbabwe Retailers president Denford Mutashu also said the separation of FCA accounts would attract US dollar deposits in the economy.

“It means that everyone who has been stashing money under their pillows they can now deposit it in their bank accounts knowing that they can get it. This will create confidence in the economy. It will have a positive bearing on bank deposits,” Mutashu said. – News Day