PPC Calls The Floating of the Foreign Exchange a Positive Development

PPC Calls The Floating of the Foreign Exchange a Posititve Development
Image Credit: New Zimbabwe

Cement producer PPC, in a notice to shareholders, called some changes introduced by the Reserve Bank of Zimbabwe Governor Dr John Mangudya in the 2019 monetary policy a positive development toward curbing high inflation in the country.

The RBZ Governor, in the monetary policy last month announced the establishment of an inter-bank foreign exchange market to formalise the trading of RTGS balances and bond notes with other currencies including the US Dollar.

“We view the introduction of a formalised floating foreign exchange market as a positive development toward curbing the high inflation and excessive premiums created by the parallel exchange rates,” PPC’ Head-Investor Relations, Anashrin Pillay said.

“The exchange market should result in a more efficient allocation of foreign currency, removing the distortions that were impacting the market, and facilitate the repatriation of cash in the medium to long-term.”

On implications of the latest monetary policy to the PPC’s balance sheet and liquidity, the company said a full assessment including systems alignment with the monetary policy is underway.

PPC is also expecting pronouncement from the Public Accountants and Auditors Board (PAAB) on the impact of the monetary policy statement.

“PPC reported a cash balance of US$63m at the end of September 2018 which was reduced to US$60m by a debt repayment at the end of February 2019,” Pillay said. “The initial rate of 2.5 RTGS $:1 US$ applies only to a portion of the US$60m cash balance, amounting to US$30m – US$35m”

“The remaining balance including US$16m in dividends and US$5m rights offer proceeds, qualifies as legacy debt due to PPC RSA which is awaiting repatriation.”

Zimbabwe’s local currency is being rated at 2.5 RTGS: $US1 following the changes introduced by the RBZ governor.

Besides PPC, an economist Professor Ashok Chakravarti also praised the floating of the local currency alongside other currencies.

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