Zim records US$2.6bn forex surplus

(Last Updated On: September 27, 2022)

BUSINESS REPORTER

Zimbabwe recorded a US$2.6bn foreign exchange surplus as at August 31 on the back of firming forex reciepts which outpaced the growth in foreign payments, the central bank said Tuesday, pinning on the improved external sector environment to stabilise the exchange rate and prices.

Foreign currency receipts stood at US$7.7bn as at August 23, up 32.4% from US$5.8bn recorded in the comparable period last year.

The foreign currency receipts compare favourably with the corresponding
foreign payments which amounted to US$5.1bn in the same period under review, central bank governor John Mangudya said in a statement after the bank’s Monetary Policy Committee (MPC) held last week.

This translated into a surplus foreign exchange position with attendant positive implications for external sector stability.

“The Committee also expressed confidence that that the prevailing favourable external sector environment, as reflected by robust performance in foreign currency receipts, will provide further impetus to the achievements relating to the exchange rate and
price stability,” he said.

Mangudya said the MPC had noted the increased uptake of gold coins which is seen as an alternative investment product to holding the US$.

A total of 9516, gold coins valued at ZWL$9bn had been sold as at September 23, 2022, with 35% having been sold to individuals and 65% to corporates, including asset management and insurance entities, he said.

Mangudya said the MPC “expressed satisfaction” with the progress registered with regard to the convergence of the parallel market and willing-buyer willing-seller foreign exchange rates.

The foreign exchange rate premium has significantly declined from an elevated level of 140% in May 2022 to current levels of between 5% and 15%, which is consistent with regional and international norms, he said.

“This positive development on the exchange rate front is envisaged to go a long way in eliminating arbitrage opportunities which were fueling forward pricing models and hence fomenting adverse inflation and exchange rate expectations,”  Mangudya said.

Meanwhile, the MPC has resolved
maintained the bank policy rate and medium-term lending rate at current levels of 200% and 100%, respectively, until” durable stability, measured by a sustained decline in month-on-month inflation to desired levels of less than 5%, is attained”.

RBZ further liberalised the foreign exchange market by increasing the maximum amount that entities can purchase from banks for bona fide foreign payments under the willing-buyer willing-seller system to US$100,000 per week per entity from US$20,000.

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