Reserve Bank of Zimbabwe Governor Dr John Panonetsa Mangudya has said in light of the current currency crisis, it is pleasing to note that the country’s Banks are Sitting On US$2,7Billion Enough To Build Reserves Confidence.
Addressing the Doctor Tinashe Muzamhindo led think-tank, Zimbabwe Institute of Strategic Thinking (ZIST) breakfast meeting yesterday, the apex Bank Chief said Zimbabwe is building adequate foreign currency reserves to sustain the local currency.
Doctor Mangudya said, “Currently our banks are sitting on US$1,7billion and add to the US$1billion in IMF’s SDR it totals US$2,7.This is enough to build confidence in our reserves and stabilize our local currency.”
This comes on the back of weakening of the Zimbabwean dollar against the USD Currency which has led to high inflation. Last month inflation paced speedily at its fastest rate reaching 131,7 percent. Three days ago, the Zimbabwe dollar fell to US$1:ZWL$352.0626 from US$1:ZWL$338.4921 at Tuesday’s latest 21 June 2022 foreign currency exchange auction.
To compound to it, there are also concerns that foreign payments could also increase this year from last year’s US$7 billion given the global inflation from the Russian/Ukraine conflict.
Prices of commodities such as wheat, maize, and petroleum products have significantly risen and will likely increase the country’s import bill.
The good news brought by the foreign currency reserves, nevertheless means better days are coming, after Governor Mangudya also confirmed foreign currency receipts should move in leaps and bounds reaching US$10-12 billion by end of this year ample to build reserves adequate to sustain the Zimbabwean local Currency.
Doctor Mangudya in essence means well as this is indicative growth in foreign currency receipts is anchored on favourable global prices of minerals which are key imports for the country and improving diaspora remittances.
During the first quarter to March, the country has already earned US$4,5 billion, which is a 34 percent increase from last year comparable period levels.
“We had record foreign currency receipts last year and we have begun on a good note. At this rate we are going to be at US$10-12 billion by end of 2022,” said Dr Mangudya.
In 2021 Zimbabwe’s total foreign currency receipts reached US$9,7 billion which was the highest ever for the country. Nevertheless, this was against foreign payments of US$7 billion resulting in a positive balance of the payment for the year.
Measures taken by the Central Bank Chief are indeed storing and shoring up confidence in the Economy.