RBZ pumps US$32m into market

Sunday Mail Reporter

THE Reserve Bank of Zimbabwe (RBZ) has injected approximately US$32 million into the interbank foreign exchange market over the past three weeks to help stabilise the Zimbabwe Gold (ZiG) currency and address supply-demand imbalances.

The intervention comes as the last quarter of the year typically witnesses heightened demand for foreign currency, driven by concurrent preparations for the summer cropping season and the festive season.

In a statement released on Friday, RBZ Governor Dr John Mushayavanhu said: “During the past three weeks of October 2024, the Reserve Bank has injected about US$32 million into the interbank foreign exchange market to smoothen the mismatches between supply and demand. Traditionally, the last quarter of the year witnesses increased demand for foreign exchange to meet critical requirements for the summer agricultural season and
for preparations for the start of the festive period.”

During this time of the year, Dr Mushayavanhu said, there is generally an increase in demand for forex by businesses seeking to procure agricultural inputs for resale and for festive season stockpiling.

He said the bank’s latest interventions will ensure businesses have access to foreign currency through formal channels and avoid reliance on the black market.

Operation of the willing-buyer, willing-seller (WBWS) forex market, he added, has improved significantly following rollout of new interventions by the Monetary Policy Committee late last month.

“Holders of foreign exchange, including exporters, have been selling their foreign currency in exchange for ZiG to fund their tax obligations and other payments denominated in local currency,” he said.

“However, with the end of the tobacco selling season, we have noticed a slowdown in the supply of foreign exchange to the WBWS interbank market and an increase in pipeline demand.”

Over the past three weeks, pipeline demand averaged around US$15 million, which led the central bank to intervene.

“The pipeline demand for this week has risen to US$25 million due to increased pressures to fund the 2024/2025 agricultural season requirements,” he said.

“Consequently, on October 24, 2024, the Reserve Bank offered a market-clearing foreign currency sale of US$25 million, and the market could only take up about US$19 million because prospective buyers of foreign currency did not have enough ZiG liquidity to purchase available foreign currency.

“The recent market intervention has brought the cumulative participation of the Reserve Bank in the WBWS market to US$50 million in October 2024 alone.”