The Reserve Bank of Zimbabwe (RBZ) has said about 70% of domestic expenditure is in US dollars.
This was announced by RBZ Governor John Mangudya in the 2023 Monetary Policy Statement seen by Pindula News.
Mangudya also said as of December 31, 2022, the Foreign Currency Accounts (FCA) deposits in the banking system accounted for 64.2% of total deposits, with the remainder being ZW$ deposits. Said Mangudya:
Transactional activities in the retail and wholesale sectors also points to the same structure of currency composition as shown by recent Confederation of Zimbabwe Industry (CZI) surveys, which reported that on average USD sales contribute 66% to foreign currency generation for the businesses. The dual currency structure of the economy is corroborated by estimates by the Zimbabwe National Statistics Agency (ZimStat) at Classification of Individual Consumption by Purpose (COICOP) division level.
Mangudya also noted that domestic inflation reflects the significant foreign currency inflows in the economy by adopting blended inflation as the country’s reference inflation and reflects the dual currency structure for the following reasons:
1). Total forex receipts at US$11.6 billion in 2022 were the highest FX inflows ever received in the country.
2). About 70% of domestic expenditure is in US dollars; and
3). Foreign currency deposits and loans constitute about 65% of total banking sector deposits.
The central bank also said the inflation developments largely reflect movements in the exchange rate as prices in USD have been relatively stable and, in some instances, declining.
Mangudya said this points to the need to sustain exchange rate stability to anchor inflation expectations and stabilize prices under the dual currency environment.
The Zimbabwean economy has been informally re-dollarising in recent years as the local currency has continued to shed value against other currencies, mainly the USD.
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