'Zimbabwe govt will not intervene on the interbank rate'
By Staff writer | 27 Feb 2019 at 07:13hrs
Finance and Economic Development Mthuli Ncube has said government will not dictate interbank market rates introduced last week, but will instead "manage the volatility."
He also said the new currency framework should help unleash market instruments such as forward and future contracts, derivatives and other such instruments that investors can use to hedge their positions.
Addressing journalists during a Post Cabinet press conference, Ncube said the introduction of intermarket rates and the Real Time Gross Settlement (RTGS) Dollar had stabilized the economy and boosted investor confidence.
"The debut of the RTGS dollar and intermarket rates has been successful, because the one-to-one rate was expensive especially for exporters.
"We are not setting the rate and we will not intervene. All we will do is to manage the volatility, but government will stay out of the market. The reason why we started on 1:2.5 is that we had to trigger something on the market," said Ncube.
He added: "Government is too big to play in that market. If we get in, we will end up distorting it. We will finance the market but we have put a cap at $500 000.
The Minister said since the pronouncement of the MPS, foreign investors have given them thumbs up. "The Monetary Policy introduced normalcy in the market and has created certainty. Foreign investors are saying this is good. We were walking on leg and now we are walking with two," he said.
Government last week pegged the RTGS dollar at 1:2.5 during the debutant floating of the local currency, in a move that was received with mixed feelings.
While the business community welcomed the new development, the general public believe the floating of the local currency will result in the skyrocketing of prices of basic commodities.
In response to the MPS, gold deliveries have plummeted amid revelations by the Mines and Mines Development ministry that only 20 kilograms of the mineral had been delivered at the Reserve Bank of Zimbabwe (RBZ) to date.