The Monetary Policy Committee (MPC) of the Reserve Bank of Zimbabwe (RBZ) has allowed bureaux de change to process small value foreign currency transactions of up to US$50 per person once a week.
In April this year, RBZ directed bureaux de change to actively participate in the foreign exchange market to meet the foreign currency needs of small-scale enterprises and individuals.
“Further liberalising the operations of bureaux de change to promote financial inclusion by allowing them to process small value foreign currency transactions of up to US$50 per person per week on the basis of individual identities, with charges and commissions levied by the bureaux de change not exceeding 10% per transaction,” reads the MPC statement.
Bureaux de change (BDC) subs-sector plays a key role in the foreign exchange market.
The BDC operators ensure that forex gets to the retail end of the market for travelers needing personal or business travel allowances, parents or guardians seeking dollars to pay for their children’s schools fees abroad or people that need dollars to pay medical bills abroad.
In order to clear a backlog of foreign currency allocations owed from central bank-run auctions: “The MPC urged the Bank to clear the backlog in a month’s time to enable the Bank to operate the auction system within the set rules of funding auction allotments within two weeks from the date of auction”.
The foreign exchange allotment backlog is estimated at US$175 million.
“The MPC also emphasised the need for banks to avoid the use of overdrafts to fund auction allotments except in exceptional circumstances in support of productive sector activities.”
Foreign currency receipts rose 32% to US$5.09 billion as at 7 August 2021 compared to US$3.85 billion received during the same period in 2020. Cumulative foreign exchange payments surged by 42% to US$3.59 billion as at 7th August 2021 compared to US$2.52 billion for the same period in 2020. These among other issues are poised to sustain the foreign exchange market and foster exchange rate stability.
Below are some of the major highlights of the meeting…
– Maintains the bank policy rate at 40% and the interest rate on the Medium Term Bank Accommodation Facility at 30% per annum
– Maintaining the reserve money target at 20%
– Maintaining the US$500K and US$20K maximum bid limits for primary producers under the main auction and SMEs auction, respectively
– Capping bid limits for secondary users, consumables and services at US$100K under the main auction
– Urging banks to encourage their clients to invest in interest bearing and value preserving financial instruments – Harare