The Reserve Bank of Zimbabwe (RBZ) has doubled cash imports to $100 million per month as the central bank tries to ameliorate the prevailing cash shortages as well as meet rising demand from recovering industries.
Last year, monetary authorities were importing between $40 million and $50 million every month.
RBZ Governor Dr John Mangudya told The Sunday Mail last week that $600 million has been imported since the beginning of the year.
He said the apex bank will continue importing cash to try and meet demand.
But there are still concerns that significant amounts are finding their way onto the black market.
“In this economy, we are importing about $100 million on a monthly basis, and this is an increase from about $10 (million) or $15 million last year.
“Our economy is expanding. An expanding economy requires more foreign currency to buy raw materials. The rate at which the economy is expanding is faster than the rate at which we are getting foreign currency,” said Dr Mangudya.
“We are quite happy that by December 2017, exports grew by 36 percent. Then in the first 6 months of this year, exports have grown by 16 percent.”
“Companies such as Lobels and Delta are expanding. They need foreign currency to import concentrates; so the demand for foreign currency is still higher than what is available.”
The central bank believes that the parallel market for foreign currency is still enduring because hard currencies, which form the backbone of the multicurrency system, are being used as an investment asset, rather than a medium of exchange.
“Why are people selling money on the streets? It’s because they view the US dollar as an investment asset as opposed to a medium of exchange. So, it means that because of the foreign currency demand, people are now selling currency as a livelihood. The fact that people are selling currency means that the forex is available. The economy is not as dry as what people say. lf it was dry, no one would have been selling the currency and no one would have been on the streets.”
He said the RBZ will continue supporting initiatives that are meant to boost production as this is the sustainable way of generating the much-needed foreign currency.
“Currency is sustained by production. You give strength of a currency through production. We are quite happy that the economy is expanding. We have a positive business outlook.”
Gold miners and tobacco farmers receive part of their payments in foreign currency.
“In short, we are facing these temporary challenges because of the mismatch between supply and demand of foreign currency.
“The only solution is to increase production in the country. People are selling money because foreign currency is in short supply, but as long as we continue to increase production, there will be no need to sell the money because people will sell goods and services.”
According to Dr Mangudya, it has been difficult to rein in cash vendors because of the inherent complexities of gathering prosecutable evidence for such cases.
“The RBZ is not an arresting entity. But if you ask the police, they will tell you that their constraint is that it is difficult to see people exchanging money, all they see are people holding money.
“There is a difference between holding money and exchanging the same. When you see a person holding money, it is not a crime. We are in a multicurrency system.”
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