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RBZ Moves To Control Money Supply To Stabilise The Exchange Rate

RBZ Moves To Control Money Supply To Stabilise The Exchange Rate

The government has made fresh moves to control the money supply and stabilise the exchange rate, Reserve Bank of Zimbabwe (RBZ) governor John Mangudya said yesterday.

He was speaking at a webinar hosted by the Zimbabwe Independent in partnership with the Bankers Association of Zimbabwe to unpack the monetary policy statement released last week.

Mangudya said the money it has been supplying to businesses, contractors and farmers has been abused. He said a committee comprising the RBZ and Finance ministry resolved to close taps to control liquidity. Mangudya said:

Over the past two weeks, the government’s release of funds to the market was so limited to the extent that the parallel market did not move.

There has been a shortage of local currency on the market and that is the reason the parallel market has been stable for the past two weeks, the closed tap other than for salaries, did not see a lot of money coming onto the market.

He said inflation was a monetary phenomenon related to the rate of circulation of money and the central bank was closely monitoring the two. Mangudya added:

The parallel market rates are key drivers of the exchange rate, but the key drivers of these rates is not even the government, its business. Unfortunately, what we have noticed is that most of the money that businesses get is coming from the government so the government has got projects like road construction, dam construction and they are paying to the farmers.

Mangudya said recipients of money from the government should be disciplined.

More: NewsDay Zimbabwe

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