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The Reserve Bank of Zimbabwe (RBZ) is facing mounting pressure to tighten the monetary policy and take action to curb the country’s rogue exchange rate and soaring inflation and there are still substantial upside risks to the forecast for both.
When the markets opened yesterday, anyone checking the exchange rate between the Zimbabwe dollar and the greenback on the parallel market was probably taken aback to get quotations ranging between ZWL$16 000:US$1 and ZWL$17 000:US1 , up from ZWL$8 000 at the beginning of January 2024.
On the formal market such as the willing seller-willing buyer, the Zimbabwe dollar was yesterday trading at ZWL$10 152: US$1, up from about ZWL$5 900 in January 2024.
Apparently, the out-going RBZ governor, Dr John Mangudya, is expected to deliver the 2024 monetary policy in the next few weeks.
Dr Mangudya will step down from his role at the central bank in April and will be succeeded by Dr John Mushayavanhu, a former FBC Holdings CEO.
Analysts highlighted that Dr. Mangudya needs to come up with measures to deal with the runaway exchange rate that is pushing prices up and the price of goods and services has consequently skyrocketed.
“The elephant in the room is the exchange rate stability and if governor Dr Mangudya puts in place measures that will arrest inflation and stabilise the exchange rate everything will fall in place,” the Confederation of Zimbabwe Industries president Kurai Matsheza
He added that all other challenges depend on these factors and if he wins against exchange rate, he (RBZ governor) will win the forex retention threshold puzzle as the gap between the official and parallel market will be narrow.
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