RBZ Says Zimbabwe Will Have Official Exchange Rates After Tuesday’s Auction.

The governor of the Reserve Bank John Mangudya has said in an interview in the Sunday Mail that the official exchange rate will be pegged after the Foriegn Currency Auction on Tuesday.

What we are saying is very clear in that the auction market is going to receive bids starting Tuesday from an array of foreign currency users. After receiving the bids we will end up having an average rate that will be used for all official systems.

Dr John Mangudya, Reserve Bank Govenor

He added that the 1:25 rate that the government has been operating under is no longer viable. In the same interview said that shops will now have to display the rate after the Auction and mark their prices according to it and not the parallel market rate.

Dr Mangudya also said

“We are doing this for two reasons; firstly to flatten the inflation curve and also to flatten the curve for the rate between the official market and the black market. The rate that we will have on Tuesday will reflect what the market says because we will now have an official market for foreign currency”

It’s a case of wait and see. How long will this new auction system keep the runaway rate at bay?

If the rate on Tuesday isn’t favourable to business, it isn’t beyond the realm of possibility that some will only want to receive payment for goods and services in foreign currency.

With every new measure implemented it feels like we are inching closer to the announcement of “redollarisation”.