$1.7 Billion Forex Backlog veering to be freed by the Reserve Bank of Zimbabwe

By Abdul Rahman Bangura–

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NEW AFRICA BUSINESS NEWS (NABN) Freetown, Sierra Leone- The Reserve Bank of Zimbabwe (RBZ) is proceeding to wipe a $1.7 billion foreign currency backlog which has been scolded for retrogressing growth in the manufacturing sector.

This publishes that, the central bank’s foreign currency system is subdued as it strives with growing pressure, overseeing to a two-month backlog.

Governor John Mangudya – Reserve Bank of Zimbabwe in his Mid-Term Monetary Policy Statement on August 05th, 2021 asserted, the bank has now created sufficient reserves to clear the backlog.

“The Bank has put in place measures to deal with the residual foreign exchange auction allotment backlog, utilization existing letters of credit facilities for the importation of strategic commodities and capital goods to lessen the demand on the FEAS,” told Mangudya.

“These measures include: supporting banks to promote financial intermediation to leverage on the current long foreign exchange position of around US$1,7 billion in the banking system, working closely with Government to ensure that some of the foreign exchange balances in the Exchequer Account are utilized to expunge the backlog,”
Mangudya noted.

The forex auction system was inaugurated in 2019 to stabilize the RTGS dollar to US dollar rate which jeopardized to get out of control. Mangudya similarly, announced the bank was working on modalities to address the gap between the official and parallel market exchange rates.

“The Bank is addressing the gap between the official and parallel exchange rates through tightening money supply, expunging the foreign exchange allotment backlog, increasing the attractiveness of the local currency so that the local currency complements rather than competes with the USD, discouraging rent-seeking behavior
and promote 47 sustainable behavior and fair play in the foreign exchange market and provision of forward guidance to anchor exchange rate expectations and enhance business sentiment,” he let out.

Mangudya mumbled, the FEAS will be retained as it had, had a substantial consequence on stabilization of Zimbabwe’s unstable economy.

“The Bank is satisfied with the achievements of the Foreign Exchange Auction System which have had a significant impact on the economy over the year it has been in operation. The Bank is thus continuing with the Foreign Exchange Auction System and is determined to strengthen the system to ensure that it reflects economic and market fundamentals of supply and demand,” he explained.

For New Africa Business News (NABN) Abdul Rahman Bangura Reports,  Africa Correspondent