RBZ intervenes again with forex to cool the market

The Reserve Bank of Zimbabwe (RBZ) has injected an additional US$50 million into the market to quench businesses’ appetite for foreign currency with the apex bank pledging to continue intervening in the market despite last week’s 43 percent devaluation of the Zimbabwe Gold (ZiG) dollar.

The latest cash injection, follows the bank’s efforts to stabilise the currency after pouring US$64 million in September and US$50 million in the month before.

Addressing concerns over the central bank’s future strategy, the RBZ Governor, Dr John Mushayavanhu emphasised the bank’s commitment to maintaining exchange rate stability by constantly combing the market and addressing needs as they arise.

“The RBZ will continue to intervene in the market to augment the willing-buyer willing-seller market so as to ensure that all bona fide forex requirements are met. Last week we intervened to the tune of US$50 million but only US$34 million was bought,” said Mushayavanhu.

The bank’s intervention signals its readiness to support the economy amid growing volatility in the currency markets. However, industry and business still believe the central bank is not doing enough to oil the cogs of the foreign currency market.

Kurai Mtsheza an industrialist and immediate past president of the Confederation of Zimbabwe Industries (CZI), said the reasons for a lower uptake might be many, but industry has various demands that need foreign currency.

“The money was released and available to our members, but what we are sure of is that the pipeline demand of foreign currency is much more than the figure that is being said. So it might be an issue of other measures of control by the Bank that has reduced demand,” he said.

Quizzed on whether it is due to the fact that there is a measure which says a company should not bid for foreign currency when it has existing nostro balances, Matsheza saying: “The issue has definitely affected demand of foreign currency as any company that has foreign currency in its accounts automatically sees their bid disqualified.”

On another issue related to the foreign market exchange, the bank and industry engaged on the issue of expunging nostro balances first before going to the auction.

Matsheza confirmed the development: “Yes, the meeting was held, and recommendations were made that the measure should be removed as companies hold foreign currency for different reasons. It might be for obligations that are to be settled in a week or 10 days’ time and for some it can be for capital expenditure which is budgeted for.”

Matsheza said stakeholders told the central bank that members do not go to the market without a genuine cause.

The RBZ did not give an immediate answer as they said they will deliberate on the issue further.

Tapiwa Karoro, the president of the Zimbabwe National Chamber of Commerce (ZNCC), lauded the move by the RBZ to pump in more money into the market saying it shows that the bank is in sync with the market.

“The US$50 million injection means that the RBZ is willing to keep the market well oiled and our members have not yet said anything about being prevented from accessing the money on the market. So, we should not speculate why the market uptake was not equal to the injection, because we cannot know the exact demand in a week,” he said.

Old Mutual Zimbabwe CEO, Samuel Matsekete, emphasised the need for a clear and transparent roadmap to guide the country’s economic recovery. During his company’s media briefing yesterday, Matsekete underscored the importance of rebuilding confidence in the local currency through consistent policies and well-defined milestones.

“We must strive for the ideal, guided by a clear roadmap and a path to follow,” Matsekete stated. “It is essential to assess how transparent this roadmap is and how effectively we can share the milestones along the way.”

He highlighted the significance of aligning policymakers and economic agents on a shared vision for economic development. “By having a transparent roadmap and sharing the milestones, everyone will know what to expect at each stage,” he explained.

Matsekete also stressed the crucial role of market-driven forces in shaping the country’s economic trajectory.

“Markets should be the arbiters of resource allocation and price determination,” he said. “By enabling markets to establish currency pricing and prioritise initiatives, we can create a clear and effective platform for economic growth.”

His remarks reflect a growing consensus among economic experts and stakeholders in Zimbabwe that a well-defined and transparent economic roadmap is essential for rebuilding confidence and fostering sustainable development.

Economist, Gladys Shumbambiri-Mutsopotsi, believes that while the RBZ’s intervention has provided temporary relief, the broader impact on the economy will depend on structural reforms.

“Stabilising the exchange rate without addressing underlying issues like inflationary pressures and market confidence, is a short-term solution. To ensure long-term stability, we need deeper fiscal discipline and enhanced transparency in the forex market,” she said.

Industrialist, Dr Sean Muzangwa, echoed similar sentiments, stressing that while the recent injections have been helpful, more is needed to restore industrial confidence.

“The RBZ’s actions are commendable, but what we need now is policy consistency. If businesses are to plan ahead, they must be confident that the rules of the game will not change unexpectedly. Only then can we expect sustained growth and a stable currency,” Muzangwa noted.

Shumbambiri-Mutsopotsi further emphasised the need for clarity in the central bank’s strategy.

“The key issue right now is communication. The RBZ must clearly outline its long-term plan for the currency market. Without a clear roadmap, market participants will remain cautious, and this will continue to hinder the efficient allocation of foreign currency,” she added.

Muzangwa, on the other hand, highlighted the urgency of addressing forex allocation bottlenecks.

“Industries are struggling with delays in accessing foreign currency, which affects production timelines.

The RBZ must streamline its processes and reduce bureaucratic hurdles to ensure that the economy runs smoothly. A responsive, agile system is critical to restoring confidence and keeping industries productive,” he explained.

Together, these perspectives highlight the need for a more comprehensive approach as Zimbabwe navigates its currency challenges, balancing immediate interventions with long-term reforms.-ebniessweekl