Renowned economic analyst Professor Gift Mugano says the exchange rate will not stabilize because Reserve Bank of Zimbabwe (RBZ) has no control over excessive liquidity coming from treasury.
He was reacting to sentiments by RBZ governor John Mushayavanhu who recently assured Zimbabweans of currency stability, citing an increase in gold reserves backing the Zimbabwe Gold (ZiG) to over US$450 million.
Governor Mushayavanhu clarified that recent exchange rate movements are market-driven, not a devaluation, & emphasized the bank’s commitment to economic stability.
Speaking in a televised interview with the national broadcaster Zimbabwe Broadcasting Corporation, Mushayavanhu said there no reason why the ZiG will continue to depreciate.
He based his sentiments on money supply which said is under control, while emphasising that gold reserves will continue to grow.
However, Mugano says there is a lot of pressures beyond RBZ’s control which will cause the ZiG to depreciate.
Watch out on the following:
- Funding of the upcoming agricultural season.
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Payment of bonuses & increases in ZiG salaries.
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Increase in payments to contractors as GoZ ahead of the rain season.
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Last minute payments by treasury to Ministries, Departments, Agencies & suppliers as is always the case in December every – treasury always do last minute payments before the end of the fiscal year.
The question which arises is that if the rate crashed in September before these anticipated huge payments, what is the fate of Mr ZiG in the next 3 months?
Zwnews
