Business Reporter
THE Reserve Bank of Zimbabwe (RBZ) has said only the interbank market has the authority to determine the official rate, clearing the confusion around the interpretation of market-determined exchange rates.
This follows confusion triggered by some Business Member Organizations in the tourism sector which recently interpreted the Monetary Policy Statement’s mention of “market-determined” exchange rates as implying that markets are now free to set their own exchange rates, prompting traders to violate the stipulated exchange rates.
But in a statement, the RBZ governor, Dr John Mushayavanhu implored stakeholders and the public to take note of the fact that the country is operating under a floating Exchange Rate system where the exchange rate is determined in the interbank market for foreign exchange under the Willing Buyer Willing Seller arrangement.
He said this rate is purely determined through the authorized dealers (Banks) based on trades that would have been transacted through them.
“For clarity, “market determined rate” simply means a rate determined on the interbank foreign exchange market by banks is the one that should be used to guide the pricing of all other goods and services in the economy. Therefore, no other business entity outside the interbank market should determine the exchange rate.
“The February 2025 Monetary Policy Statement again provided clarity that the 5% trading margin communicated in previous Interbank Foreign Exchange Trading Guidelines was only applicable for the determination of the starting exchange rate at the introduction of ZWG,” he said.
Mushayavanhu added that banks are free to on-sell foreign currency purchased from willing sellers (including the RBZ) at a margin consistent with international best practices.
