Senior Business Reporter
Zimbabwe Stock Exchange (ZSE) listed firm BridgeFort Capital Limited has commended authorities for the resolute stance in controlling money supply growth and eliminating quasi-fiscal activities saying this has brought about exchange rate stability since the introduction of the new currency, the Zimbabwe Gold (ZiG).
The Reserve Bank of Zimbabwe (RBZ) in April this year introduced the ZiG as part of a raft of policy interventions to address exchange rate volatility, curtail inflation and restore macroeconomic stability.
The new currency is backed by precious minerals, mainly gold, and foreign currency reserves.
In its annual report for 2023 released yesterday, BridgeFort Capital Limited said: "The introduction of ZiG on April 8, 2024 accompanied by a commitment to control money supply and eliminate quasi-fiscal activities has seen a significant improvement in exchange rate stability."
RBZ Governor Dr John Mushayavanhu is on record saying the central bank was recalibrating its monetary policy framework to address price and exchange rate instability in the economy.
The policy sought to restore price and exchange rate stability and remonetise the local currency to serve its role as a store of value, which was critical to restore market confidence and trust.
Before the 2024 monetary policy and introduction of the ZiG exchange rate and inflation volatilities were the major challenges that undermined the prospects of the Zimbabwe dollar under the multi-currency system.
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In the past, the exchange rate volatility, which drove rapid inflationary pressures in the market, was occasioned by high demand for foreign currency as a store of value, reduced confidence due to currency volatility at the time as well as the widening gap between the interbank and black market rates.
In an interview, economist Ms Chipo Warikandwa said Zimbabwe's monetary authorities have managed to hold fort, containing inflationary pressures and exchange rate stability.
"Zimbabwe has experienced deflation for the first time in many months with consumer prices dropping by 2,4 percent in May while currency stability, the ZiG since its introduction, gained 1,9 percent against the United States dollar.
"Looking at the rate of inflation, authorities seem to be on track to achieve a rate of between 2 percent and 5 percent by the end of the year, all this is anchored on the monetary policy framework the country has adopted, therefore, the ZiG marks a new era for Zimbabwe's economy with potential for redefinition of growth," she said.
