Zimbabwe to supply interbank market with $500m on Monday. The central bank of Zimbabwe has acquired a colossal $500 million loan from unnamed international banks. This will support interbank currency trading and alleviate a dollar crunch that has brought fuel and medicine scarcity,said the RBZ Governor John Mangudya.
In March 2019 Mangudya said the central bank borrowed $985 million from Afrexim Bank and other African lenders to purchase fuel and critical imports.
Zimbabweans transporting goods from South Africa, commonly referred to as “Malayitsha”, are seeing their businesses do well as a result of the prices soaring on food ,and fuel in Zimbabwe. Malayitshas reside in South Africa. They take orders from families and deliver them to the struggling neighbors. The epithet ‘Malayitsha’ was coined because they carry large loads of goods to Zimbabwe. They charge exorbitant prices and some do not deliver the goods to their respective destinations which makes their business flourish.
Zimbabwe will supply the interbank foreign exchange market with $500m today as it tries to rejuvenate a currency trading system implemented in February that’s been infested by a lack of liquidity.
In February 2019 the central bank created the interbank market and said its pseudo-currency, known as RTGS, would no longer be pegged to the dollar but would be allowed to trade at fair value on the market.
Still, a shortage of available dollars has meant that there has been little usage and its rate of 3.45 to the dollar is well below the black market rate of 7. The quasi currency, now known as RTGS dollars, isn’t traded outside the borders of Zimbabwe.
“This amount shall go a long way to stabilize the exchange rates and prices of goods and services,” John Mangudya, the governor of the Reserve Bank of Zimbabwe, said in a statement tweeted by the central bank. The money will be drawn from the central bank by the government, it said in a separate tweet.
The central bank applied the system earlier this year as chronic foreign exchange death had caused limited supplies of fuel and wheat, two key imports, and caused inflation to accelerate at its fastest rate since 2008.
In his tweet Minister of Finance Dr Mthuli Ncube said that the loan had been secured from international banks, which he did not disclose and added on his tweets yesterday saying that the facility will use $500m to stabilise prices. Once the breadbasket nation in Africa’s economy is still grotesque, hence it remains to be seen if this is effective in order to resuscitate the crippling economy.