By ETimes

The Reserve Bank of Zimbabwe (RBZ) through its Monetary Policy Committee (MPC) at their latest meeting maintained the main interest rate at 80% still citing imported inflation which is causing exchange rate volatility.
 
The Medium-Term Bank Accommodation Facility Interest Rate was reviewed from 40% to 50% per annum as the minimum deposit rates for local dollar savings and time deposits was also maintained at 12.5% and 25%, per annum respectively.
 
The quarterly reserve money growth target was kept at 5% for the quarter ending June 2022.
 
Such a decision was as a result of satisfactory economic fundamentals which have left the country with a stable exchange rate according to the committee.
 
According to the MPC statement, the stable environment has resulted in a positive growth of the real sector, public works undertaken by Government, fiscal sustainability and a tight monetary policy stance.
 
The country realised US$2.4 billion in foreign currency receipts in the first quarter of 2022, which is 15.9% higher than the same period last year.
 
“The positive trend in foreign currency generation has seen the country realising US$2.4 billion in foreign currency receipts during the first quarter of 2022, an increase of 15.9% compared to foreign currency received during the same period in 2021,” the MPC statement read.
 
In the quarter under review, the country had a foreign currency receipts surplus of US$1.9 billion.
 
The statement read, “The foreign currency receipts were against foreign payments of US$1.8 billion, leaving a surplus of US$1.9 billion.”
 
MPC said the country is suffering from 2008 hyperinflation hangover which has caused the parallel market rate to run away.
 
“The existence of strong economic fundamentals suggests that the recent exchange rate shocks are a manifestation of negative sentiments or perceptions attributable to people’s past experiences with hyperinflation and inevitable losses incurred during currency reforms. The Committee further noted that the erosion of people’s savings due to inflation compelled them to try and avoid similar losses by holding the US dollar as a store of value,” Mangudya said – Harare

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