Coronavuris Forces RBZ To Allow Use of Foreign Currency in Zimbabwe

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The RBZ Building sprouting over trees in Harare

Reserve Bank of Zimbabwe (RBZ) has made available an option to use free funds to pay goods and services chargeable in local currency to mitigate the impact of COVID-19. Free funds is foreign currency received by individuals, international organisations, NGOs and embassies.

The central bank had in the past restricted use of free funds to specific good including fuel.

“This intervention takes into account the country’s limited access to foreign finance, which is adversely affecting the country’s balance of payments position,” RBZ governor John Mangudya said.

“The dispensation to use free funds will not only make payment for goods and services easier but will also promote social distancing as banks will be able to provide digital financial services to their customers that include producers of gold, tobacco and cotton and recipients of diaspora remittances. Digital financial transactions will go a long way in enhancing confidence in the economy and assisting banks to play a critical role as systemic stabilisers of the economy during these unprecedented times.”

Besides allowing use of free funds in the purchase of goods and services, the central bank also reveal plans on transactions.

“The Bank also agreed with the banking sector to suspend increases in charges related to the
provision of all electronic payments during these trying times,” Mangudya said.

“Similarly, the Bank is also engaging the mobile network providers to ensure that their mobile banking charges are reduced in order to promote electronic banking which is in line with social distancing.”

“Whilst the legal instrument to bring the above measures into effect is being finalised, the Bank urges the transacting public and producers of gold, tobacco and cotton to fully embrace electronic payment platforms as we fight the spread of COVID-19,” he went on.

Government through the RBZ suspended also has suspended the managed floating exchange rate system to provide for greater certainty in the pricing of goods and services in the economy.

“In its place, the Bank has, with immediate effect, adopted a fixed exchange rate system at the current interbank level of ZW$25 to the US$. This measure will be reviewed when markets stabilise from the effects of COVID-19,” Mangudya added.

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