Harare – The Monetary Policy Committee (MPC) of the Reserve Bank of Zimbabwe has agreed to launch the market tracker under the Reuters system which is intended to enhance transparency in the operation of interbank market, by the end of November 2019.
The system helps with automating the tracking of foreign exchange market volumes and activity in real time, with operational efficiency of the interbank market critical to improve foreign currency inflows to the productive sector.
The nine-member MPC chaired by RBZ governor Dr John Mangudya, was set up by finance minister in September 2019, among its key mandate to determining the monetary policy of Zimbabwe, including the setting of limits on open market operations by the bank and ensure price stability.
It is also tasked with determining interest rates in line with the Government’s economic policies and targets for growth and employment creation as well as other monetary policy functions.
In a press statement, after the MPC held its second meeting on 15 November 2019, Dr Mangudya said that the Committee also resolved to set up a Working Group comprising of the Reserve Bank officials, treasurers from Authorised Dealers and members of the MPC to review the rules of the interbank market, with a view to improving its efficiency.
“The Committee also underscored the need to incorporate Bureaux de Change in the process in order to expand, deepen and enhance the operational efficiency of the interbank market,” Dr Mangudya said.
Despite the introduction of the interbank market in February this year, foreign currency backlog continue hampering the productive sector with most listed companies reporting challenges in acquiring critical raw materials for production.
Dr Mangudya in the Mid-Term Monetary Policy Review Statement presented in September 2019 said that US$799 million has been traded on the interbank market since its introduction.
Spiking inflation and exchange rate, however, still remain a cause for concern whilst the convergence between the official exchange market and the parallel market is far from materialising.
Government has been implementing quite a number of monetary policy changes to break the economic impasse, most of which is yet to bear fruit.
Among some of the key deliberations made in the recent MPC meeting is the downward revision of the Bank policy rate from 70% to 35% with effect from 20th November 2019 in a move that aimed at improving the productive sector.
On exports, the Committee resolved that all exporters that do not repatriate export proceeds within the statutory Exchange Control approved limits, shall forfeit their retention of export proceeds through the liquidation of such funds upon receipt onto the interbank market at the prevailing exchange rates.
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Raynold Mhotseka is a Journalism and Media Studies student at the University of Zimbabwe. He serves as a news writer at financial research firm, Equity Axis where he is currently on attachment. He can be contacted through the following email links, firstname.lastname@example.org and email@example.com.