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Wallace Ruzvidzo

Herald Reporter

THE Reserve Bank of Zimbabwe (RBZ) has assured the nation that it will weather all the shocks that have emanated from foreign currency supply and demand mismatches in recent weeks and is going “back to basics” to ensure price and currency stability.

In an update issued yesterday, the RBZ said it was working to ensure the stability of the Zimbabwe Gold (ZiG) at all costs and had employed a “back to basics” approach which would see it upholding it’s core mandate of maintaining price and currency stability.

This approach will also ensure that money in circulation is fully backed by gold, other precious minerals and foreign currency reserves.

“The Reserve Bank of Zimbabwe is making elaborate moves to ensure the stability of ZiG through the “back-to-basics” approach to the country’s monetary policy and execution of the bank’s mandate.

“Back-to-basics means that the central bank will uphold in strict terms, it’s core mandate of ensuring price and currency stability as well as its commitment to ensure that the money in circulation is fully backed by gold, other precious minerals and foreign currency reserves,” said RBZ.

“ZiG is our currency and our future, and the Reserve Bank is assuring all stakeholders that the elaborate steps that the bank is taking will weather the shocks that may occur”.

It said the temporary turmoil in the money markets over the past few weeks was due to foreign currency supply and demand mismatches.

“The temporary shock, experienced in the past few weeks on ZiG was primarily emanating from foreign currency supply and demand mismatches, as preparation for the summer cropping season has peaked up.

“To cover this gap, the Reserve Bank has on 19/09/2024, injected US$40 million into the interbank market to bring the cumulative total for the month of September to US$64 million.

“This intervention will ensure that all genuine foreign currency applications are honoured and reduce the pressure on ZiG.”

The RBZ said the interventions being implemented would stabilise prices.

“This is expected to stabilise prices to the benefit of all Zimbabweans as traders and other economic players are assured of their foreign currency needs.

“The Bank further wishes to assure the public that the ongoing interbank market interventions are necessary to ensure ZiG stability and co-circulation of currencies within the multicurrency framework,” said RBZ.

In a statement on Thursday, RBZ Governor Dr John Mushayavanhu said the bank had observed a recent increase in demand for foreign currency, which had temporarily strained the foreign exchange market.

This surge was despite the injection of US$50 million in July to address the increase in foreign currency requests.

To address supply-demand imbalances last month and this month, the RBZ first injected US$24 million into the interbank foreign exchange market during the first two weeks of this month and then another US$40 million this week in response to the ongoing demand for foreign currency.

This resulted in a cumulative foreign currency injection of US$64 million for this month alone.