The Reserve Bank of Zimbabwe governor John Mangudya has said that the bank is introducing gold coins as it moves to create a new avenue for investors. The move comes as there has been increased demand for the United States dollar as a store of wealth leading to the sharp depreciation of the local legal tender. The dollar is trading between ZW$600-$650 on the parallel market and ZW$352.0626 on the foreign currency auction system. The MPC also resolved to put in place mechanisms to formalise forward pricing arrangements through the development of a market for forward exchange rates “having noted the widespread use of forward pricing in foreign exchange by some economic agents”.
The MPC also increased the bank policy rate to 200% from 80% in line with inflation to curb speculative borrowings, blamed for leading to the rout of the local currency. Annual inflation raced to 191.6% in June from 131.7% in May. Mangudya said the MPC noted that the increase in inflation was undermining consumer demand and confidence and that, if not controlled, it would reverse the significant economic gains achieved over the past two years.
To discuss Zimbabwe’s new ways of tackling inflation with Tolulope Adeleru-Balogun is Prosper Chitambara, Development Economist and Policy Advisor from Lusaka, Zambia, is Prosper Chitambara.
On the full episode of Thursday’s Business Edge, Lekan Onabanjo also covers the kick-off of the EU-Nigeria Summit holding in Lagos. The European Union is looking to revamp and rework its trade relations and partnerships with Africa to be more equitable, fair, and progressive. Business Edge will be there to bring all the details.
Watch in full above.