Reserve Bank of Zimbabwe governor John Mangudya has touted introduction of the interbank foreign currency market as having helped stabilise exchange volatilities. Parallel market and formal market exchange rates have appeared to converge as banks and bureau de changes ramp up their activities on the foreign currency markets following liberalisation of the exchange rate regime this year.
“The introduction of the interbank foreign currency market was meant to address the foreign currency grid-lock arising from widening parallel market activities by harnessing foreign exchange through the formal market,” Mangudya said in the mid-term monetary policy statement on Friday.
According to central bank data, as much as US$799 million in foreign currency has been traded on the official interbank market for forex in Zimbabwe. Prior to this, those holding foreign currency shunned formal channels because of the 1:1 exchange rate for local currency and US dollars.
Zimbabwe has also moved to introduce US dollar denominated savings bonds to “promote a savings culture and to provide reasonable return on (foreign currency accounts) deposits” as well as “US dollar cash balances held by individuals and firms” inside Zimbabwe.