![\"\"](\"https:\/\/www.africa-press.com\/zimbabwe\/wp-content\/uploads\/sites\/14\/2019\/01\/My-Money-2-300x200.jpg\")
<\/p>\nZimbabwe’s new RTGS dollar held firm at around 2,5 to the United States dollar (USD) as it started trading yesterday, the Daily News can report.<\/p>\n
With the bond note, bond coin and RTGS dollar (RTGS$) assuming the role of Zimbabwe\u2019s medium of exchange, banks quoted the new currency within the 2,5 range to the greenback.<\/p>\n
This was way lower than trades that had obtained on the parallel market before the unveiling of the monetary policy statement on Wednesday, where the USD was fetching as much as four bond notes.<\/p>\n
Ecobank and Steward Bank were among lenders quoting prices, with rates between 2,44 and 2,53 per dollar.<\/p>\n
<\/p>\n
On the black market, the rate for the quasi-currencies strengthened slightly, but at roughly 3,5 per dollar yesterday, according to local website marketwatch.co.zw.<\/p>\n
RBZ governor John Mangudya told an oversubscribed business forum hosted by the Daily News yesterday that the central bank had agreed with commercial lenders to let the RTGS$ float at 2,5 to the USD.<\/p>\n
\u201cThis is a willing-buyer, willing seller arrangement. So, it\u2019s not an auction, it\u2019s a floating exchange rate system\u2026,\u201d he told business leaders.<\/p>\n
Under the new regime, banks will be required to report interbank activities daily to the RBZ while bureaux de change shall be authorised to sell up to US$10 000 daily for small transactions.<\/p>\n
The central bank will publish the going daily rates in national newspapers.<\/p>\n
Mangudya said black market prices for real dollars were high because it had been illegal to trade that way and thus they carried a risk premium, which would drop now that trading had been formalised.<\/p>\n
The RTGS$ are expecting to hold steady, with an anticipated central bank sell-off of dollars helping ease tightness in the supply of hard currency.<\/p>\n
On Wednesday, the RBZ made a bold step to free up its fiat currency, particularly scrapping the bond note-USD peg and paving way for devaluation as the market will now determine rates.<\/p>\n
If yesterday\u2019s trades are anything to go by, these measures have won the support of banks and business.<\/p>\n
Finance minister Mthuli Ncube who also graced the Daily News Business Breakfast Forum said \u201cindustry also wanted this (currency reforms) to happen,\u201d referring to the market-based mechanism in the allocation of foreign currency and the market-based exchange rate.<\/p>\n
He said government could not let \u201cthe streets\u201d continue \u201cdriving policy, driving prices, driving everything.\u201d<\/p>\n
\u201cAnd look, we thought, this is not a good idea, you think so as well. Now we want to make sure that we formalise things and that\u2019s what we have done. And let\u2019s be honest colleagues, the 1:1 was punishing exporters. We saw that the market top-over was a better way of doing this,\u201d Ncube said.<\/p>\n
First launched in 2016, the authorities had decreed a one-to-one pegged exchange rate between bond note and the US dollar even though the greenback and other foreign currencies were now fetching higher premiums on the parallel market.<\/p>\n
The much-criticised move starved the economy of dollars into the formal market, scared away investment and plunged the stuttering economy into massive price hikes of goods and services as businesses played a cat-and-mouse game with the authorities who abhorred dealing on the unofficial market.<\/p>\n
Mangudya told guests at the Daily News Business Breakfast Forum that all prices will now be in RTGS$, which will replace the US dollar as the currency of reference, pricing and debt settlements.<\/p>\n
He said there will be no change in money held by individuals and corporates.<\/p>\n
\u201cEcoCash is going to continue working the way it was working yesterday, so is Telecash and OneMoney. No change. Are the banks going to change? Not the accounts that are there, they are not going to change. So, all what we have done is to formalise what is there. So that formalisation has implications, this is where we spend more time to present the Monetary Policy Statement,\u201d he said, denying reports of a rift with Ncube.<\/p>\n
The Finance minister concurred with Mangudya that there was no rift between them.<\/p>\n
The RBZ boss said he has secured sufficient foreign currency funding to safeguard and underpin the interbank market from the Africa Export Import Bank, PTA Bank and Ecobank.<\/p>\n
Explaining why he decided to adopt the RTGS$ as the major instrument of trade, he said all the money in Zimbabwe was seated on the RTGS platform.<\/p>\n
\u201cAnd out of $10 billion of deposits in this economy, about 95 percent of that money is seated on the RTGS platform; 25 percent are bond notes. We have been very restrained in printing the bond notes. We only have $437 million of bond notes and $86 million of bond coins,\u201d he said.<\/p>\n
Mangudya called on black market traders to apply for licenses to operate retail foreign exchange bureaux as the southern African country cracks down on money-laundering.<\/p>\n
Mangudya admitted that the 1:1 exchange rate was unfair to exporters.<\/p>\n
\u201cI am guilty as charged, taking exporters\u2019 money at 1:1 when prices had risen by three or four times, it was unfair. We had to change in accordance with the demand for change in the market,\u201d Mangudya.<\/p>\n
The biggest opposition party, the MDC, isn\u2019t convinced.<\/p>\n
\u201cIt\u2019s insanity,\u201d said Tendai Biti, a senior party leader and former Finance minister.<\/p>\n
\u201cThey have through the back door reintroduced the Zimbabwe dollar.\u201d<\/p>\n
He said the country\u2019s fundamentals won\u2019t support a new currency because there are no reserves to back it up, no market confidence and no macroeconomic stability. Biti estimates that the RTGS dollar will trade at between six and eight to the US dollar.<\/p>\n
The central bank will probably have to supply plenty of real dollars to keep the exchange rate stable, according to NKC African Economics, based in Paarl, South Africa.<\/p>\n
\u201cTo anchor price stability, the Reserve Bank will aggressively intervene in the liquidity market,\u201d Jee-A van der Linde, an economist at NKC, said in a note to clients.<\/p>\n
\u201cThe fact that officials finally came to their senses and ditched the notion that Zimbabwe\u2019s quasi-currency was at par with the US dollar, is comforting.\u201d<\/p>\n
Foreign investors in Zimbabwean equities, who have struggled to repatriate dividends or move their money out in recent years because of the dollar squeeze, would probably wait before using the new system, according to Allan Gray Ltd.<\/p>\n
The Cape Town-based investment manager owns stocks in brewer Delta Corp. Ltd. and Econet Wireless Zimbabwe Ltd among others.<\/p>\n
\u201cIt is too early to tell how this new system will work, but it is an important step in the right direction,\u201d said Nick Ndiritu, a money manager at Allan Gray.<\/p>\n
\u201cOnce the dust settles over the coming days and weeks, the long-term success of any currency reforms in Zimbabwe depends on the extent to which government can curb the growth of money supply and maintain fiscal discipline.<\/p>\n","protected":false},"excerpt":{"rendered":"
Zimbabwe’s new RTGS dollar held firm at around 2,5 to the United States dollar (USD) as it started trading yesterday, the Daily News can report. With the bond note, bond coin and RTGS dollar (RTGS$) assuming the role of Zimbabwe\u2019s medium of exchange, banks quoted the new currency within the 2,5 range to the greenback. […]<\/p>\n","protected":false},"author":84,"featured_media":4398,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3,6,8,35],"tags":[342,249,259,174,362,371,251],"class_list":{"0":"post-4393","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-all-news","8":"category-economy","9":"category-head-lines","10":"category-homepage-english","11":"tag-business","12":"tag-currency","13":"tag-dollar","14":"tag-finance","15":"tag-market","16":"tag-rtgs","17":"tag-us-dollar"},"yoast_head":"\n