Staff Reporter
Zimbabwe’s foreign currency inflows have surged by 19.1% to surpass US$11 billion, driven by exports, diaspora remittances, and Foreign Direct Investment (FDI), according to data released by the Reserve Bank of Zimbabwe (RBZ) Monetary Policy Committee (MPC) on December 3, 2024.
The increase from a baseline of US$9 billion in the first ten months of 2024 signals renewed confidence in the country’s economic recovery and is expected to reinforce currency stability.
RBZ Governor, Dr John Mushayavanhu, expressed optimism, attributing the stability of the Zimbabwean dollar to the tight monetary policy and improved external earnings.
“The growth in foreign currency inflows is a clear indicator that our policies are working. We are confident that this will help maintain exchange rate stability and curb inflation,” he said.
The MPC resolved to maintain the bank policy rate at 35% to consolidate gains in inflation control and ensure liquidity discipline in the market. The central bank also emphasized the need for a competitive and transparent interbank foreign exchange market to enhance price discovery and close exchange rate gaps.
Economist Dr Nyasha Kaseke highlighted the importance of sustained inflows to support the local currency, “Foreign currency inflows are critical for defending the value of the Zimbabwe Gold (ZiG) currency. Incentives to boost productivity in key sectors will be vital in sustaining this trend,” he said.
Inflation, which had spiked to over 37% in October, dropped to 11.7% in November, reflecting the effectiveness of the RBZ’s measures. The central bank noted that the depreciation of the ZiG in September had been contained, contributing to price stability.
Economic Analyst and Executive Dean at Bindura University’s Faculty of Commerce, Dr Zachary Tambudzai, praised the central bank’s efforts.
“This performance underscores the resilience of the economy and the effectiveness of monetary policy interventions,” he said.
With external receipts expected to breach the US$12 billion mark by the end of the year, authorities remain optimistic about achieving broader economic stability.
“The focus now should be on creating a conducive environment for investment and ensuring that these inflows translate into tangible benefits for the economy,” Dr Tambudzai added.
Key outcomes from the MPC meeting include, maintaining the policy rate at 35% to sustain tight monetary conditions, enhancing the interbank market to reduce exchange rate premiums and introducing a productive sector facility to support key industries.
The RBZ’s ongoing efforts to stabilize the currency and foster economic growth are expected to bolster confidence in the financial sector and attract further investment as the country looks to maintain its upward trajectory.
