Zimbabwe’s central bank supports its foreign exchange stability claims, reporting adequate reserves. Only $15 million of a $20 million forex offer was purchased, signaling lower demand. Key businesses are pushing for a free float of the gold-backed currency, ZiG, to enhance economic stability.
Zimbabwe’s central bank governor, John Mushayavanhu, has reassured citizens that the nation is not experiencing a foreign exchange (forex) crisis. During a recent market intervention, the central bank offered $20 million in forex to meet demand; however, only $15 million was purchased by the market, indicating a lower demand than anticipated. This situation suggests that Zimbabwe possesses adequate foreign currency reserves to satisfy market needs and quell fears about currency shortages.
Despite this assurance, major enterprises are advocating for a shift towards a free-floating local currency. This currency, known as ZiG, is backed by gold, and business leaders believe that allowing it to float freely would encourage stability and investor confidence in the economy. They argue that the current fixed exchange rate may not reflect the true market conditions and can hamper growth and investment opportunities.
In summary, Zimbabwe’s central bank has confirmed the absence of a forex crisis, citing sufficient currency reserves. Nonetheless, there is pressure from key businesses to permit a free-float system for the gold-backed currency, ZiG, to better align currency value with market dynamics and support economic growth.
Original Source: iafrica.com
