Zimbabwe’s foreign currency receipts up 37,8pc

ZIMBABWE’S foreign currency receipts increased 37,8 percent to US$6,1 billion over the nine months to September this year from US$4,4 billion during the same period last year, the Reserve Bank of Zimbabwe (RBZ) has revealed.

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Addressing a parliamentary pre-budget consultation seminar in Victoria Falls last week, RBZ governor John Mangudya,  said of the US$6,1 foreign currency receipts during the period under review, exports proceeds amounted to US$3,4 billion, diaspora remittance US$1 billion, non-governmental organisations US$708 million and loan proceeds US$729 million.

Income receipts amounted to US$103 million and foreign investment US$53,3 million.

“Foreign currency receipts between January and September 2021 amounted to US$6,09 billion compared to US$4,43 billion over the same period in 2020, representing a 37, 8 percent increase,” Mangudya said.

Governor of the Reserve Bank of Zimbabwe, John Mangudya.

He said the strong foreign currency receipts had helped to sustain the foreign currency auction system since last year.

“Over US$2 billion has been dispensed since the start of the auction system in 2020… About 70 percent has gone towards the productive sectors, including capital and equipment and raw materials imports,” he said.

Commenting on the favourable external sector position to sustain the auction and exchange rate, Mangudya said the bank’s current account balance is projected to register a surplus of US$1 billion in 2021 driven by strong recovery of the global economy, strong performance in export and diaspora remittances, as well as moderated imports due to improved domestic production

“About US$300 million is needed to purchase all the stock of reserve money of $28 billion at the current exchange rate of US$1: Z$93. This is against the country’s foreign currency holdings in excess of US$4,5 billion. This shows that exchange rate volatility is unrelated to monetary developments. It’s behavioural,” he said.

Mangudya said inflation is expected to continue declining to lower single digit levels by December 2022.

“Low inflation will assist in value preservation and guarantee certainty in budget allocations…Risks to inflation include increase in regulated prices; global food and oil prices. It also includes increased global inflation and domestic behavioural factors,” said Mangudya.

To support the 2022 National Budget, Mangudya said the bank had taken some monetary measures and would continue to take appropriate actions to ensure that foreign currency allotments were settled timeously.

“The bank will pursue a strict monetary targeting framework to ensure that money supply does not destabilise the exchange rate. Ensure that truant behaviour in the economy is minimised and support domestic savings in local currency through instruments that compensate local currency depositors for potential exchange rate depreciation,” he said.

Mangudya said RBZ would encourage banks to set appropriate interest rate margins for savings and time deposits to improve the appeal of the Zimbabwean dollar as a value preservative currency and continue to encourage them to streamline bank charges to stimulate foreign currency deposits by the banking public.

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