The Reserve Bank of Zimbabwe (RBZ) has announced a significant injection of foreign currency into the market to meet demand and consolidate the stability of the Zimbabwean Gold (ZiG) currency.
Central Bank Governor John Mushayavanhu said on Thursday, September 19, that the RBZ has cumulatively injected a total of US$64 million into the foreign currency market.
This intervention was necessitated by a buildup of foreign currency demand in the pipeline at banks over the past few weeks.
Mushayavanhu explained that the RBZ’s actions are consistent with its policy stance of ensuring that all legitimate foreign currency applications are honoured, as well as its role as an active participant in the foreign exchange market.
Furthermore, the Reserve Bank Governor assured the public that the central bank will continue to facilitate the seamless settlement of foreign payments in the interbank foreign exchange market. Reads the statement:
RESERVE BANK OF ZIMBABWE’S PARTICIPATION IN THE FOREIGN EXCHANGE MARKET TO CONSOLIDATE ZiG STABILITY
Over the past weeks, the Reserve Bank witnessed a build-up in pipeline demand for foreign currency at banks, reflecting transitory foreign currency supply and demand mismatches, thus, exerting undue pressure on the foreign exchange market.
This is, notwithstanding, the significant injection of US$50 million by the Reserve Bank in July 2024 to clear the pipeline demand for foreign currency at banks.
Pursuant to smoothening the supply/demand mismatches in August/September 2024, the Reserve Bank has during the first two weeks of September 2024, injected US$24 million into the interbank foreign exchange market.
Furthermore, guided by the obtaining pipeline demand at banks as at 18 September 2024, the Reserve Bank has, as of today (19 September 2024) sold into the interbank market an additional US$40 million.
This has resulted in a cumulative foreign currency injection totalling US$64 million for the month of September 2024 alone.
The Reserve Bank’s intervention is consistent with its policy stance of ensuring that all bona-fide foreign currency applications are honoured and with its role as a participant in the foreign exchange market.
The Reserve Bank is, therefore, pleased to advise that it will continue to ensure that there is seamless settlement of foreign payments in the interbank foreign exchange market.
The Reserve Bank is also pleased to advise that foreign currency receipts increased by 13.4% in the first eight months of 2024, compared to the same period in 2023.
The increase in foreign currency receipts will ensure continued timely settlement of foreign payments from importers’ foreign currency accounts (FCAs) and the Reserve Bank’s weekly foreign currency injections from the export surrender receipts.
In addition, the favourable performance in foreign currency receipts will continue to sustain economic activity.
Importantly, the cumulative foreign currency injection of US$64 million by the Reserve Bank in the month of September 2024 will effectively mop-up significant liquidity in the market, thus, further consolidating the stability of ZiG.
Against this background, the Reserve Bank calls upon economic agents to comply with the stipulated foreign exchange framework in the pricing of goods and services.
The Reserve Bank will continue to entrench the stability of ZiG and ensure the smooth settlement of foreign exchange transactions through the interbank foreign exchange market.
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