Exchange rate convergence takes effect

By Davison Vandira

THE convergence of the Interbank and the Reserve Bank of Zimbabwe Auction exchange rates has been described as key towards ensuring macro-economic stability by reducing unjustified demand for the greenback on the auction system.

The Interbank and Auction system rates are now separated by just ZWL1 after this Tuesday’s RBZ auction system left the rate at ZWL293 for every US$1 , while the interbank rate is at ZWL294.

For economic analyst, Mr Kudakwashe Mugova the convergence of the two rates is a move in the right direction towards a true price discovery mechanism.

“It is quite encouraging that the RBZ is now implementing measures to solve exchange rate misalignment which has been a major source of instability and inflation,” he said.

Reserve Bank of Zimbabwe Monetary Policy Committee Member, Mr Persistence Gwanyanya expects the convergence of the rates to rationalise foreign currency demand and improve exchange rate stability.

“The process of attaining exchange rate equilibrium position has started and as monetary authorities we are determined to achieve that for enhanced stability of our macroeconomic environment,” noted Gwanyanya.

Zimbabwe’s economic development journey like any other in the world is expected to be determined by the resilience and stability of the exchange rate.

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