THE Government through the Reserve Bank of Zimbabwe will tomorrow release US$500 million to supply the interbank foreign currency market, a move which will culminate in the reduction of basic commodities prices and dampen activities on the parallel exchange rate.
In a tweet on its official Tweeter account yesterday, RBZ said it would release US$500 million on Monday to supply the interbank forex market.
“Government through the Reserve Bank of Zimbabwe is drawing down US$500 million on Monday, 20 May 2019, to supply the interbank forex market to meet the forex payment requirements of business and individuals,” read the tweet.
Responding to the tweet by the central bank, Finance and Economic Development Minister Professor Mthuli Ncube said: “The US$500 million new facility raised from international banks will increase the supply of foreign currency for imports, for industry and other sectors.”
Contacted for comment RBZ Governor Dr John Mangudya said the facility would breathe life into the interbank foreign currency market.
The interbank market rate has crept up from its starting level of 2,5 to the green-back to around 3,3 remaining significantly lower than the illegal market rates.
“The facility will ensure that the interbank market is alive and kicking so that we meet the requirements of companies, producers and individuals that need to make foreign payment. What this means to me and you is that the foreign currency market will be stabilised . . . ,” said Dr Mangudya.
He said the stabilisation of the inter market rate would result in improved production by industries, by so doing stabilising the prices of basic commodities.
The initiative is likely to be complemented by industry, which has since resolved to work closely with Government and labour in urgently developing an action plan that is expected to stabilise prices of basic commodities and determine fair remuneration for workers in order to “arrest” current distortions that are causing consumer discomfort.
Business believes that “the basic economic fundamentals are positive” and “the economy is currently generating (foreign) currency that should be enough for the economy”.
Business membership organisations (BMOs), who included representatives of industry, agriculture, mining, banking and the retail sector, agreed at a high-level meeting held in the capital on Friday that the challenges that are being experienced in the economy can be directly linked to foreign currency availability and pricing distortions.
Government has also launched an investigation into anti-trust behaviour and price rigging on mounting speculation that some companies could have abused the RBZ’s foreign currency facility.
Head of the Special Anti-Corruption Unit in the Office of the President and Cabinet Mr Tabani Mpofu said there were serious concerns over the sudden jump of basic commodities such as life-saving drugs in pharmacies and food stuffs.
“There are allegations of cartels which are stifling competition. There is suspicion that in most of these commodities, there is corruption.
“We are also looking at bread prices because there are allegations that there could be collusion between bakers and some millers.”