RESERVE Bank of Zimbabwe (RBZ) governor Gideon Gono on Wednesday devalued the Zimbabwe dollar from the current auction rate of about $4 300 against the United States greenback to $5 200.
The governor told a pleasantly surprised audience of business executives and bankers that the move would be reviewed every six months as from May 1 to reflect “appreciation” in the local currency. Gono tried to disguise the devaluation by saying it was meant to “shore up dwindling foreign currency coffers” and entice Zimbabweans in the diaspora to send money home. The move however raised eyebrows from government ministers who attended the monetary policy statement review presentation event held at the central bank headquarters in Harare. The last time such a move was taken, the former Minister of Finance and Economic Development Simba Makoni was booted out of Cabinet by President Robert Mugabe. Mugabe said anyone “talking devaluation” was a “saboteur”.
“As an incentive for Zimbabweans in the diaspora to send money home, the central bank has waived the charging of commissions by money transfer agencies,” Gono said. “This means that for all foreign currency remittances made through this facility, beneficiaries in Zimbabwe will be paid the full amounts converted at the ruling auction rate or at the diaspora floor price of $5 200/US dollar, whichever is higher.”
The governor said Zimbabweans at home should “immediately” tell their brothers, sisters, relatives and loved ones to send the forex home. The Zimbabwe dollar has continued to be pegged at about $824 against the US greenback in an arrangement that has riled the business community especially exporters.
“Exporters would supply funds to the auction at the auction exchange rate or a suppliers’ floor price, whichever is higher,” Gono said. “The export floor price has been set at $5 200 against the US dollar and would be reviewed periodically, taking into account changes in inflation differentials.”