The Reserve Bank of Zimbabwe (RBZ) governor John Mangudya said that an extra $1 billion will be injected on a drip-feed basis to increase the cash in circulation.
Mangudya said this while addressing Members of Parliament attending the 2020 National Budget seminar at Elephant Hills Resorts in Victoria Falls on Thursday.
He revealed that $2 bond coins and $2 and $5 notes will be eased into circulation to add to the $855 million bond notes and coins already in use.
This will bring issued cash to just under 10 per cent of total deposits in both local and foreign currency.
Mangudya added that the Zimbabwe dollar should exchange at $5-$8 against the US dollar and not the current 1:15 at the interbank market.
The central bank chief also said that Zimbabwe has the lowest cash to deposits ratio when compared to other African countries, with Tanzania having up to 15 per cent.
Currently, Zimbabwe has about $19 billion in circulation, with only 4,5 per cent being cash.
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Here is my take on this whole new money thing. I have been studying this govt over the past year or so am sure like how everyone has been. A trend seems to be emerging. They are more crafters than planners. They conscientised the citizens that an impending new money is coming. The timing snd what they hope to achieve couldnt be a mere councidence that it is coming at a time when battered zimbos are about to get some fairly significant inflows of forex from the diaspora for xmas and january school fees. I say significant because they would have also received their bonuses in the countries they are working. Like how rbz vanquished us$ and impounded all the forex in banks this is another spin of the same tale. Injection of this new money by rbz will be timed in such a way it will increase money supply, the us$ will crush, rates will fall, the black market will become dizzy. Rbz will buy all the diaspora forex at rubbish rates and ince the inflows of forex are over rbz will mop up excess liquidity and we get back to where we are today, no cash in circulation. Problem for Zimbos thpugh is prices will not crush because business knows the fundamentals that genuinely bring the prices down have not changed. So in real terms ypur hard earned forex will be buying far less. My advise… dont be lazy, make that trip to bots or south and get what your money is worth. Dont give rbz your hard earned money
Steven – absolutely spot on. Deceitfull thieves. But the money/cash might just run out before Christmas, becqause that would have been stolen as well, and will only be available at the borders, but on the other side. This exercise is nothing but a HUGE big thieving job. It could go horribly wrong for Govt.
$2 and $5 notes. I ask you! Does the Reserve Bank have any idea of the reality on the ground? And after the injection of notes let us hope that the weekly withdrawal limit be revised upwards.