The Reserve Bank of Zimbabwe (RBZ) has announced new monetary policy measures aimed at bolstering the local currency, the Zimbabwe dollar (ZiG), including a reduction in the foreign currency retention level for exporters and the removal of limits on forex trading.
Exporters will now be required to surrender 70% of their earnings in US dollars to the RBZ, down from 75%. This move is intended to increase the supply of foreign currency and support the ZiG, but it is likely to further reduce exporters' profitability.
The RBZ has also removed limits on forex trade, allowing banks and traders to on-sell forex at a margin consistent with international best practices. This measure is meant to address the gap between the official and informal market rates, but its effectiveness remains to be seen.
The RBZ has maintained its policy interest rate at 35% but increased the minimum bank deposit rate by 1.5 percentage points to 5%.
The central bank reported that gold and forex reserves have increased to US$550 million, covering three times the amount of ZiG deposits in circulation. The RBZ also highlighted that it has intervened in the forex market, selling US$407.4 million between April and December 2024 and an additional US$35 million in January.
Despite increased foreign currency receipts, imports also rose in 2024, driven by food and grain imports due to the drought. The RBZ plans to release new ZiG notes with improved quality and design.