Zimbabwe Central Bank Injects US$64 Million to Butress the Floundering Gold Currency

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Harare, Zimbabwe – The Reserve Bank of Zimbabwe (RBZ) has injected US$64 million into the foreign exchange market in an effort to meet the rising demand for hard currency and ensure the timely settlement of all legitimate foreign currency transactions.

RBZ Governor Dr. John Mushayavanhu, in a statement yesterday, highlighted that the central bank had observed a surge in demand for foreign currency, which had temporarily put pressure on the foreign exchange market. This surge follows an earlier injection of US$50 million in July, which aimed to address similar foreign currency needs.

To counter the ongoing supply-demand imbalance, the central bank injected US$24 million into the interbank market during the first two weeks of September, followed by an additional US$40 million this week. This brings the total foreign currency injection for the month to US$64 million.

“The Reserve Bank’s intervention aligns with our policy of honouring all bonafide foreign currency applications,” said Dr. Mushayavanhu. “We are committed to ensuring seamless settlement of foreign payments in the interbank foreign exchange market.”

RBZ’s foreign currency injections are supported by export surrender receipts, with half of these funds allocated to maintaining liquidity in the foreign exchange market. Dr. Mushayavanhu noted that foreign currency receipts during the first eight months of the year had increased by 13.4% compared to the same period in 2023, a development expected to further support foreign payments and bolster economic activity.

The RBZ Governor also addressed concerns regarding Zimbabwe’s digital currency, the ZiG. He said the injection of US$64 million would absorb excess ZiG liquidity in the market and strengthen its stability. He urged businesses to comply with the established foreign exchange pricing framework and affirmed the central bank’s commitment to maintaining exchange rate stability.

Since the introduction of the ZiG in April, alongside the launch of the willing-buyer willing-seller system, Zimbabwe’s exchange rate has remained relatively stable, with the rate averaging around 13.6 ZiG to US$1. The system, designed to create a market-driven exchange rate, allows buyers and sellers to negotiate directly for foreign currency.

Despite complaints from businesses about inadequate access to foreign currency, authorities have dismissed these claims, maintaining that there is sufficient liquidity to meet legitimate needs. The RBZ also suggested that some businesses may be hoarding foreign currency as a means of value preservation, rather than using it for imports.

Since the inception of the ZiG and the interbank foreign exchange market, approximately US$190 million has been traded on the interbank market between April and early August.

The RBZ’s latest injection is part of ongoing efforts to support the country’s foreign exchange market and stabilize the economy.

Source: Herald