RBZ CLAIMS VICTORY OVER EXCHANGE RATE AND INFLATION WOES

The Reserve Bank of Zimbabwe (RBZ) says it has brought stability to the exchange rate and inflation. This comes after introducing several measures to improve the economy. The bank injected about US$150 million to stabilize the foreign exchange market.
The RBZ Monetary Policy Committee (MPC) met on December 3, 2024, to look at how these measures are working. They reviewed the monetary policy announced on September 27, 2024, and shared their thoughts in a statement.
According to the MPC, the policies have helped tighten the supply of money and reduce speculative activities in the forex market. They noted that since October 2024, both the exchange rate and inflation have become more stable. This is good news for Zimbabwe’s economy, as these problems have caused many challenges in the past.
The committee shared some key figures to show the progress. Inflation for October was 37.2%, but it dropped to 11.7% in November. The high inflation in October was mainly due to the Zimbabwean dollar (ZiG) losing value against the US dollar in September. However, things have now improved, and inflation is expected to return to lower levels in the coming months.
The exchange rate is also looking better. The gap between the official exchange rate and the black market rate has narrowed. The stability is being supported by strong foreign currency inflows. During the first 10 months of 2024, Zimbabwe received US$11.05 billion, an increase of 19.1% compared to the same period in 2023. In 2023, the figure was US$9.27 billion.
To keep things stable, the MPC decided to maintain its current policies. These include:
- Keeping the Bank Policy rate at 35%.
- Keeping the statutory reserve requirements for savings and time deposits at 15% for both local and foreign currency. For demand and call deposits, the rate stays at 30%.
- Improving the interbank forex market to make it more efficient and transparent.
The government has also introduced a new rule to encourage companies to sell foreign currency. Now, corporate taxes can be paid 50% in US dollars and 50% in Zimbabwean dollars. The RBZ believes this will encourage more sellers in the forex market.
The RBZ understands that its tight policies may slow down economic growth. To address this, it plans to introduce a Targeted Finance Facility (TFF). This facility will support businesses that need help. The bank will soon share more details with commercial banks on how this will work.
The MPC says it will continue to monitor the situation and adjust its policies as needed. Their goal is to keep inflation and the exchange rate stable. This, they believe, will help Zimbabwe’s economy recover and grow.
These developments show that the RBZ is working hard to fix the country’s economic problems. The recent changes are a step in the right direction, but there is still a long way to go. The stability seen now must be sustained over time for Zimbabwe to fully recover.
The RBZ’s actions will be closely watched in the coming months. Many people hope that these policies will continue to bring stability and improve the quality of life in Zimbabwe.