Reserve Bank of Zimbabwe governor John Mangudya said that the Apex bank has taken measures to deal with inflation. While answering questions soon after presenting his Monetary Policy Statement in Harare on Wednesday, Mangudya said:
We are taking the role of ensuring that the value of money is restored instead of leaving that to the parallel market. The variable that is critical to us is inflation. The best way to preserve value for money is to ensure that foreign currency is available and that the forex rate is stable.
Right now the value of money is being eroded by the parallel market.
If we continue with 1:1, the money will be eaten by inflation, which is caused by the pass-through effects of the parallel exchange. The best way to restore the value of money is, therefore, to ensure that we manage inflation and the stability of the exchange rate.
If the rate goes down from 4 to 2.5 it means we are preserving the value of money.
Right now we are so encouraged by the fact that the fiscal side of the equation is ok. Because of the measures we took.
Our target for the rate even though we have left it at willing buyer willing seller we manage runaway inflation in a couple of ways:
- we have lines of credit to stabilise exchange rate
- the interbank will provide foreign currency to bonafide transactions, not for the purposes of funding foreign currency accounts.
- we will be watching those who are attempting to manipulating the rates. Our Anti-money laundering monitoring will check on those with too much money in their accounts. We will monitor in terms of the laws in Zimbabwe.
We don’t expect a runaway rate of the exchange rate. We expect the exchange rate to go down.