Zimbabwe’s central bank will on Wednesday present its monetary policy statement amid indications that authorities will devalue the bond note currency which had been pegged to the US dollar.
The controversial bond note was introduced in 2016 at 1:1 with the dollar but now trades at 1:3.5 on the black market where the bulk of the country’s foreign currency is traded.
A top official at the Reserve Bank of Zimbabwe told Business Day the monetary policy statement would be presented on Wednesday, refusing to give any details on its contents.
“The governor will present it tomorrow (Wednesday) but obviously we will have to wait for that and comment afterwards. We are also going to have a breakfast meeting on Friday to discuss the implications of the policy,” the official said.
The official told Business Day the central bank will peg the bond notes at par with parallel market rates, which had become the standard to ascertain the real value of the surrogate currency.
“The rates prevailing at the market will determine how the governor is going to devalue the currency. Government has already shown that it is basing economic activity on the parallel (black) market. One example of this was the hike in fuel prices, whose benchmark was pegged on parallel market rates.”
The decision to amend the value of bond notes follows submissions by industry and businesses who had been affected by the country’s currency crisis behind price distortions affecting consumer goods in particular.
The monetary policy announcement had been delayed by weeks amid reports of a clash between finance minister Mthuli Ncube and Bank governor John Mangudya over fears that new measures would have a negative impact on the struggling economy.
An International Monetary Fund technical team, which was in the country last week, reportedly warned Ncube and Mangudya to be wary of negative implications of any new policy announcement.
Last week former finance minister and MDC deputy chair Tendai Biti announced that the government was preparing to announce a new currency but the ministry of finance immediately denied this.
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