Reserve Bank of Zimbabwe (RBZ) Governor Dr John Mangudya has called on the market to have confidence in the RTGS Dollar if there is to be a smooth monetary transition from the US Dollar dominated multi-currency regime that has been in place since 2009.
The Central Bank recently separated the RTGS currency from the USD balances, signalling the demise of the USD as the major currency on the local market.
However, the development has created massive distortions on foreign exchange rates despite the recent introduction of the inter-bank foreign exchange market.
“We need confidence in our own RTGS Dollar, we need confidence in ourselves and for this system to operate and operate efficiently,” the Central Bank chief told captains of industry and business at the State of the Economy Report dialogue.
This comes at a time when there are contentious issues between the government and business on the continued pricing of goods in USD currency at a time the country is de-dollarizing.
Retailers are pointing fingers at manufactures for pricing in USD, with consumers being the ultimate casualties.
But Dr Mangudya says figures from the Central Bank on total banks‘ balances reflect the contrary.
“This is where I differ with most Zimbabweans that even for local transactions they need foreign currency. I know it’s about confidence, it’s about trust, but for how long should we continue not trusting ourselves. After all what we have got is RTGS, if we look at all the balances, in the $10 billion, 80 percent is in RTGS, and 20 percent is in foreign currency. So why then do we give more weight to the 20 percent, where is our 80/20 rule,’ said Mangudya.
Analysts have however criticized the Governor for the failings of the interbank market that is meant to provide a free market trading platform for companies that need foreign currency for importation of raw materials for production.
They say the bank has failed to make the inter-bank foreign exchange market transparent and open for public scrutiny, a weakness that has been its biggest drawback to date.
Diariboard Holdings chairman, Antony Mandiwanza said the interbank market was a noble move but it has not achieved what was earlier envisioned owing to its opaque nature.
“We have seen the idea of an inter-bank market working in other countries. It has worked in Nigeria and right now they industry do not have problems like we are encountering here to access foreign currency, right now Angola started its own inter-bank market, there are lessons we should learn from,” said Mandiwanza.
263ChatBusiness has captured that many industrialists are cautious on engaging the market as price discovery issues, bidders and takers of foreign currency remain clouded in secrecy.
