The governor of the Reserve Bank of Zimbabwe (RBZ), Dr John Mangudya has said Zimbabwe recorded a significant improvement in foreign currency holdings.
Dr Mangudya attributed the development to improvement in exports, an increase in Diaspora inflows and a better business operating environment.
The RBZ boss told The Herald in an interview recently that the economy can tap into the US$1.1 billion Nostro account holdings on a regular basis to fund production and imports. Mangudya said:
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The higher the holdings the better for the foreign currency auction system to sustain production and productivity, which stabilizes the exchange rate, prices and inflation, which is good for the consumer, investors and everyone.
The banking sector foreign currency deposits stand at US$1,1 billion and this reflects holdings for Zimbabwean individuals and entities and the money is derived from exports, Diaspora remittances, loans and other sources.
We have seen significant improvement in foreign currency holdings. If you look closely you see that exports have gone up and as at November 30, 2020, exports had gone up 18,2 percent compared to 2019 from US$4,9 billion to US$5,8 billion.
Zimbabwe has had an enormous scarcity of foreign currency, an issue that is hamstringing efforts to revive the collapsed economy.
The country’s major foreign currency sources include diaspora remittances, tobacco and gold as well as other minerals.
Zimbabwe is, unfortunately, expecting reduced forex earnings from both the agriculture and mining sectors as they were this year greatly affected by the outbreak of the coronavirus.
For instance, the Southern African country is expected to record less than 20 tonnes of gold this year, its lowest gold output in 6 years.
More: The Herald