When Zimbabwe’s central bank head John Mangudya announced his monetary policy this week and the vast majority of Zimbabweans were not expecting significant policy changes or shocks.That’s due to the fact that in weeks prior to the announcement of his monetary policy on Feb.20 Mangudya was adamant about denying assertions made by the former minister of finance Tendai Biti, that Zimbabwe’s government was planning to launch a brand new currency as soon as possible. The fundamentals aren’t correct and the claims have no any basis, Mangudya said.The RTGS dollar was named from Zimbabwe’s interbank online system for payments, Real Time Gross Settlement was introduced unexpectedly.Under the new rules, Zimbabwe’s surrogate currency, which consists of bonds notes, coins as well as all electronic money including mobile moneywill now fall as an RTGs currency.
The RTGs could be viewed as an easier and safer option to bet on Mangudya in a country that has an incredibly long history of hyperinflation. Zimbabwe made use of a group of international currencies, led by the US dollar in 2009 in order to stop an unheard of period of hyperinflation that caused a decline in its value. Zimbabwean dollar.For currently this latest gamble in the currency market appears to be paying dividends with local economists calling the central bank’s decision as an “bold and progressive” step to address the country’s issues.
The shift away from 1:1 exchange rate between the bond note and greenback was a crucial step to improve the efficiency of value of the currency, analysts said.In the post-policy announcement, IH Securities stated that the plan to introduce a controlled floating exchange rate system was a good move towards enhancing competitiveness in the domestic market and in sanitizing this foreign exchange market.Others say that Mangudya is having a sophisticated strategy to deprive common Zimbabweans in their US dollars worth of savings that amount to billions of dollars through an untrue parity policy with respect to and the US currency and bond notes when the market in parallel was paying an additional 400% to the dollar.
“The monetary policy statement is a disaster that will erode livelihoods, plunge the nation into darkness and uncertainty,” said Nelson Chamisa, Zimbabwe’s main opposition leader.Economists are not impressed by the central bank’s latest decision declaring that there is a need for credit lines that are sufficient and for the creation of reserves from exports to help support an exchange rate.
In the absence of adequate reserves for foreign currency as well as significant foreign direct investments as well as credit lines and lines of credit, and lines of credit, the RTGs dollar will be in a state of stress against the US dollar, according to the Harare-based economist who is an independent, Godfrey Kanyenze.Apart from the currency reserves the trust in the new currency is very low due mostly to the inconsistencies in policies from the government of President Emmerson Mnangagwa as well as the country’s recent experience that saw the that the value of savings and deposits dropping at the time of hyperinflation.