IMF Tells Zimbabwe To Increase The Supply Of Foreign Currency In The Market
The International Monetary Fund (IMF) has said that Zimbabwe must strive to increase foreign currency supply in the market. The financial institution notes that allowing exporters to sell their earnings directly on the interbank market is one way to improve the flow of foreign currency.
Deepening the interbank foreign currency market is essential for it to function as the basis for a market-determined exchange rate and to close the parallel market spread. Staff encouraged the authorities to take steps to increase the supply of foreign currency in the market, including by allowing exporters to sell directly into the interbank foreign currency market the amount they are required to surrender to the RBZ, which would allow for an effective price formation.
The Breton Woods Institution further notes that current exchange controls are constraining foreign currency purchases. IMF statement added:
Existing exchange controls, which limit foreign currency purchases in the official interbank market for current account transactions, would continue to control demand for foreign currency, but the sanctioning and enforcement framework would be applied transparently and uniformly.
Speaking at a recent business meeting, RBZ deputy governor, Kupukile Mlambo said that around US$120 million had been traded on the platform since February. Economist Persistence Gwanyanya, however, said the market was still not well developed to encourage trade.
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