The Reserve Bank of Zimbabwe (RBZ) has resolved to liberalise the foreign exchange market by increasing the maximum amount that entities can purchase from banks. This was one of the resolutions that were made by the RBZ’s Monetary Policy Committee (MPC or Committee) during a meeting held on 23 September 2022. In a statement seen by Pindula News, RBZ governor, Dr John Mangudya said:
<blockquote>
<h2>RESOLUTIONS OF THE MONETARY POLICY COMMITTEE MEETING HELD ON 23 SEPTEMBER 2022</h2>
The Monetary Policy Committee (MPC or Committee) of the Reserve Bank of Zimbabwe (the Bank) met on 23 September 2022 to discuss the macroeconomic and financial developments in the economy and their implications on monetary policy.
The MPC expressed satisfaction with the positive impact of the recent policy measures, which have resulted in the significant fall of month-on-month inflation from 12.4% in August 2022 to 3.47% in September 2022. The decline in month-on-month inflation has in turn resulted in the decline in annual inflation to 280.4% in September 2022, down from 285.1% in August 2022. The Committee had projected annual inflation to start tapering in September 2022, having earlier reached its plateau in August 2022.
The MPC is committed to ensuring that the current disinflation trend is sustained, in both the short and long-term, through the maintenance of the tight monetary policy stance which should be buttressed by continuous fiscal prudence and close monitoring of wage-push inflation. This position is consistent with contemporary regional and global trends where monetary policy has remained tight to control inflation which is driven by both endogenous and exogenous geo-political factors.
The Committee also expressed satisfaction with the progress registered with regard to the convergence of the parallel market and willing-buyer willing-seller foreign exchange rates. The foreign exchange rate premium has significantly declined from an elevated level of 140% in May 2022 to current levels of between 5% and 15%, which is consistent with regional and international norms. This positive development
on the exchange rate front is envisaged to go a long way in eliminating arbitrage opportunities which were fueling forward pricing models and hence fomenting adverse inflation and exchange rate expectations.
The Committee also expressed confidence that that the prevailing favourable external sector environment, as reflected by robust performance in foreign currency receipts, will provide further impetus to the achievements relating to the exchange rate and price stability. Foreign currency receipts stood at US$7.7 billion as at 31 August 2022, representing a 32.4% increase from US$5.8 billion recorded during the same period in 2021. The foreign currency receipts compare favourably with the corresponding foreign payments which amounted to US$5.1 billion as at 31 August 2022, translating into a surplus foreign exchange position with attendant positive implications for
external sector stability.
The Committee noted, with satisfaction, the improved market confidence and uptake of gold coins as an alternative investment product to holding US$. A total of 9516 gold coins valued at ZW$9 billion had been sold as at 23 September 2022, with 35% having been sold to individuals and 65% to corporates, including asset management and insurance entities. 
In view of these positive developments, the MPC resolved:
i. to maintain the Bank policy rate and medium-term lending rate at current levels of 200% and 100%, respectively, until durable stability, measured by a sustained decline in month-on-month inflation to desired levels of less than 5%, is attained; and
ii. to further liberalise the foreign exchange market by increasing the maximum amount that entities can purchase from banks for bona fide foreign payments under the willing-buyer willing-seller system from the current level of US$20,000 to US$100,000 per week per entity.
Going forward, the MPC expects that a combination of the current tight monetary policy, continued use of gold coins, foreign exchange auction system, insistence of value for money by Government in its procurement processes and practices, close monitoring of possible occurrence of wage-push inflation and effective monitoring and enforcement by the Financial Intelligence Unit will sustainably anchor exchange rate expectations, thus limiting the exchange rate pass-through to inflation.
</blockquote>
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Auction: RBZ Resolves To Increase Maximum Forex Companies Can Purchase From Banks

The Reserve Bank of Zimbabwe (RBZ) Monetary Policy Committee (MPC) has agreed to increase the bank’s policy rate from 80 per cent to 200 per cent. <a href="https://news.pindula.co.zw/2022/06/27/fact-zimbabwes-interest-rate-is-the-highest-in-the-world/">An article published</a> by Pindula News earlier this Monday observed that the rate was already the highest in the world at 80 per cent. Reads a statement by RBZ Governor John Mangudya:
<blockquote>
<h2>RESOLUTIONS OF THE MONETARY POLICY COMMITTEE MEETING HELD ON 24 JUNE 2022</h2>
The Monetary Policy Committee (MPC) of the Reserve Bank of Zimbabwe (the Bank) met on 24 June 2022 and deliberated on macroeconomic and financial developments in the economy. The MPC also deliberated on the progress made in the implementation of measures announced by His Excellency, the President of the Republic of Zimbabwe on 7 May 2022, which measures, the MPC noted, had begun to bear fruit, with the convergence of the auction and the willing-buyer willing-seller foreign exchange rates.
</blockquote>

<ul>
<li class="entry-title"><a href="https://news.pindula.co.zw/2022/04/05/explainer-of-rbzs-recent-move-to-raise-interest-rates/">Explainer Of RBZ’s Recent Move To Raise Interest Rates</a></li>
</ul>
<blockquote>
The MPC expressed great concern on the recent rise in inflation, which increased to 30.7% on a month-on-month basis for June 2022 thereby increasing the year-on-year inflation for June 2022 to 191.6%. The Committee noted that the increase in inflation was undermining consumer demand and confidence and that, if not controlled, it would reverse the significant economic gains achieved over the past two years. In that 
regard, the MPC resolved to put in place the following measures to align the interest rates with the inflation developments, enhance circulation of foreign exchange and introduce an investment instrument to assist holders to store value in gold coins:
<h2>Interest Rates and Statutory Reserves</h2>
The MPC reviewed interest rates and statutory reserves with effect from 1st July 2022 as follows:
i. Increasing the Bank policy rate from 80% to 200% per annum; 
ii. Increasing the Medium Term Accommodation interest rate from 50% to 100% per annum; 
iii. Increasing the minimum deposit rate for ZW$ savings from the current 12,5% to 40% per annum and increasing the minimum rate for ZW$ time deposits from 25% to 80% per annum; and
iv. Maintaining the Statutory Reserve Requirements at the current levels of 10% for demand and call deposits and 2.5% for savings and time deposits.
<h2>Liquidation of Unutilised Retained Export Receipts</h2>
In order to enhance the circulation of foreign currency in the economy, as well as to support the willing-buyer willing-seller foreign exchange market, the MPC resolved to maintain the current export retention thresholds across the various sectors of the economy and that 25% of the unutilised export receipts shall be liquidated at the willing-buyer willing-seller exchange rate after 120 days from the date of receipt of 
the export proceeds.
<h2>Introduction of Gold Coins as a Store of Value </h2>
The MPC resolved to introduce gold coins into the market as an instrument that will enable investors to store value. The gold coins will be minted by Fidelity Gold Refineries (Private) Limited and will be sold to the public through normal banking channels.
<h2>Forward Market for Foreign Currency</h2>
Having noted the widespread use of forward pricing in foreign exchange by some economic agents, the MPC resolved that mechanisms to formalise forward pricing arrangements should be created through the development of a market for forward exchange rates. The appropriate measures in this regard will be announced in due course.
John P Mangudya 
Governor 
27 June 2022
</blockquote>
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FULL TEXT: RBZ Increases Bank Policy Rate From 80% To 200% Per Annum

The Monetary Policy Committee (MPC) of the Reserve Bank of Zimbabwe (the Bank) met on Friday last week and made a number of resolutions including that bureaux de changes can now process small value foreign currency transactions of up to US$50 per person per week. Pindula News presents the MPC statement on the resolutions made by the meeting. 
<blockquote>
<h2>RESOLUTIONS OF THE MONETARY POLICY COMMITTEE MEETING HELD ON 27 AUGUST 2021 </h2>
The Monetary Policy Committee (MPC) of the Reserve Bank of Zimbabwe (the Bank) met on the 27th of August 2021 and deliberated on recent economic and financial developments and their implications on monetary policy. 
The Committee noted with satisfaction the strong economic growth which is envisaged to be strengthened by the favourable global economic outlook and the US$961million SDR allocation from the International Monetary Fund (IMF) on 23 August 2021. 
In particular, the Committee welcomed the impressive performance of foreign currency receipts which increased by 32% to US$5.09 billion as at 7 August 2021 compared to US$3.85 billion received during the same period in 2020. On the other hand, cumulative foreign exchange payments increased by 42% to US$3.59 billion as at 7th August 2021 compared to US$2.52 billion for the same period in 2020. The significant increase in foreign currency receipts is critical for sustaining the foreign exchange market and fostering exchange rate stability.
Against this background, the MPC emphasised the need for staying the course of the current monetary policy stance which has proven to be effective in combating inflation and fostering monetary stability in the economy. Commendably, the prudent monetary policy stance has seen year-on-year inflation dropping from 837.5% in July 2020 to 50.2% in August 2021. 
The Committee agreed on the following resolutions for sustaining the current downward inflation trajectory and exchange rate stability, while supporting the foreign exchange auction system and the robust economic growth for 2021 and beyond: 
a. Maintaining the Bank policy rate at 40% per annum and the interest rate on the Medium Term Bank Accommodation Facility at 30% per annum; 
b. Maintaining the reserve money target at 20%, with the desire and view to achieving a lower level of monetary expansion by year-end, particularly if inflation and other macroeconomic developments make it necessary and prudent to do so. 
c. Upholding the measures pronounced in the recent Mid-Term Monetary Policy Statement in relation to expunging the foreign exchange allotment backlog of around US$175 million. The MPC urged the Bank to clear the backlog in a month’s time to enable the Bank to operate the auction system within the set rules of funding auction allotments within two weeks from the date of auction. The MPC also emphasised the need for banks to avoid the use of overdrafts to fund auction allotments except in exceptional circumstances in support of productive sector activities. 
d. Refining the foreign exchange auction system to enhance its purpose as a dependable and efficient mechanism of availing foreign currency to the economy by aligning the auction bidding process to the ultimate beneficial ownership concept as follows:
i. Maintaining the US$500 000 and US$20 000 maximum bid limits for primary producers under the main auction and SMEs auction, respectively; 
ii. Capping bid limits for secondary users, consumables and services at US$100 000 under the main auction; and 
iii. Encouraging the business community and banks to ensure that they exercise customer due diligence on all foreign exchange transactions in compliance with international best practices. 
e. Further liberalising the operations of bureaux de change to promote financial inclusion by allowing them to process small value foreign currency transactions of up to US$50 per person per week on the basis of individual identities, with charges and commissions levied by the bureaux de change not exceeding 10% per transaction. 
f. Urging banks to encourage their clients to invest in interest-bearing and value-preserving financial instruments available at the Bank, including time deposits and exchange rate indexed bonds. 
ohn P. Man udya Governor 30 August 2021 
</blockquote>
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RBZ's Resolutions: Bureaux de Change Allowed To Process US$50 Per Person

The Monetary Policy Committee (MPC) of the <a href="https://www.pindula.co.zw/Reserve_Bank_of_Zimbabwe">Reserve Bank of Zimbabwe</a> (RBZ) has approved a ZW$500 million facility for Micro, Small and Medium Enterprises (MSMEs). This was revealed in a statement issued by the central bank indicating resolutions of the committee. We present the statement below.
<blockquote>The Monetary Policy Committee (MPC) of the Reserve Bank of Zimbabwe (the Bank) met on 30 April 2021 and deliberated on recent economic and financial developments and their implications on monetary policy.
The Committee noted with <a href="https://news.pindula.co.zw/2019/04/29/rbz-accused-of-undermining-economic-recovery/">great satisfaction the reduction in inflation</a>, which has further fallen from 240.1% in March 2021 to 194% in April 2021. The Committee reaffirmed its commitment to sustaining the disinflationary path to the end of the year and expects year-on-year inflation to go down to below 55% by July 2021.
The MPC also made the following resolutions to support economic activity and the current stability in the economy:
<ul>
<li>a. Maintaining the Bank policy rate at 40% and the interest rate on the Medium Term Accommodation Facility (MBA) at 30% per annum;</li>
<li>b. Approved a facility of ZW$500 million for term finance for Micro, Small and Medium Enterprises (MSMEs) which the MSMEs will access from banks and microfinance institutions at 30% per annum for purposes of enhancing production and productivity across all the sectors of the economy; and</li>
<li>c. Reaffirmed its position to support bureaux de change with foreign exchange requirements to support Micro, Small and Medium Size Enterprises (MSMEs) which need foreign currency for their various productive requirements.</li>
</ul>
The MPC reaffirmed its strong commitment to continue with the conservative monetary policy stance to ensure that the current price stability is maintained.</blockquote>

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<li class="entry-title"><a href="https://news.pindula.co.zw/2021/04/30/update-rbz-selling-forex-to-bureaux-de-change-fresh-details/">UPDATE: RBZ Selling Forex To Bureaux De Change -Fresh Details</a></li>
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<a href="https://news.pindula.co.zw/2021/04/20/full-text-rbz-statement-on-access-to-forex-by-smes-individuals-through-bureaux-de-change/">FULL TEXT: RBZ Statement On Access To Forex By SMEs &amp; Individuals Through Bureaux de Change</a>
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<a href="https://news.pindula.co.zw/2021/03/30/resolutions-of-the-rbz-monetary-policy-committee-meeting-full-statement/">Resolutions Of The RBZ Monetary Policy Committee Meeting {Full Statement}</a>
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<a href="https://news.pindula.co.zw/2021/03/16/full-text-rbz-statement-on-funding-of-forex-applications/">FULL TEXT: RBZ Statement On Funding Of Forex Applications</a>
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