• Transaction Limits Doubled: Raises mobile and electronic funds transfer caps, but real purchasing power remains alarmingly low amid rampant inflation
  • Monthly Limit Insufficient: The new ZWG 16,000 cap equates to just USD 355.55, far below a living wage as currency depreciation accelerates
  • Fiscal Mismanagement Looms: Upcoming government liquidity injections threaten further devaluation, rendering new limits ineffective and exacerbating economic instability

Harare- The Reserve Bank of Zimbabwe (RBZ) has increased transaction limits for Zimbabwe Gold (ZWG) as per its latest circular.

This adjustment follows a significant 43% devaluation of the ZWG in the week to September 26, 2024, amidst accelerated depreciation in the informal currency market.

For mobile platforms, limits on person-to-person, person-to-business, and ZIPIT transactions have been raised from ZWG 2,400 per transaction to ZWG 4,800, while the monthly cap has doubled from ZWG 8,000 to ZWG 16,000.

The RBZ stated, "The public is advised that transactional limits for payments via mobile money and electronic funds transfer platforms have been adjusted upward to facilitate the procurement of goods and services in ZWG."

Conversely, he limits for electronic funds transfers have been revised in response to fluctuations in exchange rates.

Business-to-business transaction limits have increased from ZWG 280,000 and ZWG 24,000 to ZWG 560,000 and ZWG 48,000, respectively.

Simultaneously, the limits for business-to-person transactions have been adjusted from ZWG 80,000 and ZWG 8,000 to ZWG 160,000 and ZWG 16,000.

Nonetheless, these adjustments may prove insufficient, as the monthly limit of ZWG 16,000 translates to approximately USD 355.55 at the current exchange rate of 45, which falls well below a standard living wage.

Furthermore, by month-end, the exchange rates are expected to escalate due to fiscal mismanagement, as the government is likely to inject liquidity into the economy to support initiatives such as Pfumvudza and the Presidential Agricultural Scheme.

This situation could reduce the effective purchasing power to around USD 150 by month-end, affecting both individual and business transactions.

Adjusting monetary transaction limits within an inflationary context is fundamentally flawed. The new caps may ultimately mirror the previous limits by the end of the month.

This scenario disproportionately impacts lower-income individuals, as a ZWG 4,000 transaction cap necessitates multiple transactions to access the monthly limit of ZWG 16,000, resulting in cumulative transaction fees for an amount that is projected to drop below USD 300.

Currently, the parallel market exchange rate hovers between 45-50 ZWG per USD. It is imperative that any revisions to monetary policy align with parallel market rates and ideally be set at least double the prevailing market rate.

The ZWG appears poised for failure, akin to its predecessors, due to persistent fiscal indiscipline by authorities and a prevailing lack of confidence from both the public and the government.

The reliance on USD for essential transactions further underscores the government's lack of faith in its own currency.

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