The Reserve Bank of Zimbabwe (RBZ) says it injected US$64 million into the Interbank Market in September in a bid to save the ZWG currency from further depreciation on the back of spiralling parallel market exchange rates.
The local unit incepted on April 5 2024 under the stewardship of the new RBZ exchequer, John Mushayavanhu took off on a high note, closing the gap between the official and parallel market rates after consistently maintaining the US$1: ZWG 13, 80 premiums into the weeks that followed before event began to take a nasty turn.
Currently, the parallel market is now trading at premiums above US$1:ZWG20 with some traders even demanding much higher premiums depending on demand and supply dynamics.
While questions keep lingering among the majority of citizens as to what exactly is prompting the downward spiral, the government on its part has since blamed the informal economy's speculative behaviour as chief among the causes behind the depreciation.
However, some analysts contend the limited availability of foreign currency on the official market is leaving companies with very limited options except to invade the parallel market and source the much-needed foreign currency.
The Confederation of Zimbabwe Industries (CZI) recently bemoaned US$ shortages on the official market and warned that if such a trend goes unabated, there is a high risk of compromising ZWG acceptability.
Leading sugar producer, Hippo Valley Estates recently flagged the mismatch between the ZWG and US$ on revenues and expenditures highlighting an increase of ZiG-denominated sales at a time when suppliers of raw materials are rejecting the local unit in favour of the US$.
Moving swiftly to respond to the economy's dynamics Thursday, Mushayavanhu bowed down to pressure, announcing a significant foreign currency injection into the official market.
"Pursuant to smoothening the supply/demand mismatches in August/September 2024, the Reserve Bank has during the first two weeks of September 2024, injected US$24 million into the interbank foreign exchange market.
"Furthermore, guided by the obtaining pipeline demand at banks as at 18 September 2024, the Reserve Bank has, as of today (19 September 2024) sold into the interbank market an additional US$40 million. This has resulted in a cumulative foreign currency injection totalling US$64 million for the month of September 2024 alone," he said.
He said the intervention is consistent with the Bank's policy stance of ensuring that all bonafide foreign currency applications are honoured and with its role as a participant in the foreign exchange market and committed to providing timely payments into the seamless settlement of foreign payments in the interbank foreign exchange market.
He added, "The injection will effectively mop up significant liquidity in the market, thus, further consolidating the stability of ZiG. Against this background, the Reserve Bank calls upon economic agents to comply with the stipulated foreign exchange framework in the pricing of goods and services."
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An analyst who spoke to our publication implored authorities to put in place a water-tight system which enables companies to easily access foreign currency.
"The Foreign Exchange Auction system was one such strategy to avail foreign currency to hard-pressed companies and went some way to stabilize the Zim dollar. It is very impossible to keep supplying ZWG without a proper mechanism to make sure the same companies have access to the US$.
"Look here, the greenback is a key ingredient for companies across the globe. Even in neighbouring South Africa companies with pressing needs access forex through the banks so there is nothing sinister about Zimbabwe. There must be a way to ease such carnage going forward else the parallel market rates which are a price determinant factor will keep soaring," the source said.
