Zimbabwe: Fixed Exchange Rate - More Harm Than Good

analysis

The Reserve Bank of Zimbabwe suspended the new managed floating exchange rate and introduced the fixed exchange rate of US$1 to ZW$25 on March 26, 2020. Two weeks earlier (on March 11), the Treasury department had announced the introduction of a managed floating exchange rate so as to bring the urgently needed efficiency and transparency to the interbank market.

The shortlived managed floating platform was managed by the Reuters System which had been on trial since December 2019. The suspension of the managed floating rate is part of the measures supposed to provide price certainty and stability to the economy in the wake of the coronavirus pandemic.

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