Zimbabwe central bank denies fixing exchange rate of new currency

HARARE (Reuters) – Zimbabwe’s central bank governor denied on Thursday that the central bank had fixed the exchange rate of its new transitional RTGS currency and said it would let the market decide its value.

The currency has been stuck at 2.5 to the U.S. dollar since Feb. 22, two days after the southern African nation ditched a discredited 1:1 dollar peg for its dollar-surrogate bond notes and electronic dollars and merged them into a lower-value transitional currency called the RTGS dollar.

But there are worries that the central bank does not want to further devalue the RTGS dollar, a move which has discouraged those holding dollars to sell at the prevailing rate.

“We have not fixed the exchange rate and we will not fix it,” Mangudya told a committee of parliament.

Mangudya said Zimbabwe, which is facing an acute shortage of dollars, imported fuel worth $173 million in January and February through credit lines from foreign banks, which was enough to cover local demand during the period.

He said the shortages that have been seen since the start of the year were caused by some fuel dealers failing to raise enough money to buy U.S. dollars for fuel imports.