By 
Reserve Bank of Zimbabwe (RBZ) Monetary Policy Committee (MPC) has approved resolutions aimed at curbing broad money supply to stop parallel market exchange rate volatility.
This is in response to issues raised by MPs during the recent pre-budget consultations.
The measures come shortly after a crippling volatility in the parallel market exchange rates almost threatened to erode the gains of stability early this month.
In a recent statement released soon after the MPC meeting, RBZ governor John Mangudya announced the resolution to increase the Bank policy rate from 40% to 60% and the Medium Term Bank Accommodation (MBA) Facility interest rate from 30% to 40% with immediate effect.
The initiative is expected to block speculative borrowing which in turn will be used to fuel the parallel market exchange rate trades.
The measure is expected to result in positive real interest rates which is critical to foster savings in the economy.
The statutory reserve requirements for demand/call deposits from 5% to 10%, while maintaining the rate at 2,5% for savings and time deposits and increasing minimum deposit rates for Zimbabwe dollar savings and time deposits from 5% and 10% per annum to 7,5% and 20%, respectively, with a view to promoting the appeal of the Zimbabwe dollar as an investment currency.
“The MPC further tightened reserve money by reducing the quarterly growth in reserve money targets from 20% to 10% for the fourth quarter of 2021 and the first two quarters of 2022. The decision to review the reserve money growth targets was informed by the reserve money growth outturn of 9,3% for the quarter ending 30 September 2021,” said Mangudya.
The committee refined the bank’s open market operations (OMO) instruments to support optimal liquidity management.
The central bank has since introduced the Open Market Operations bills with the aim to mop up lazy excess liquidity held in bank accounts which has often been used to fuel parallel market trades.
Responding to concerns raised by parliamentarians who criticized the bank for selling foreign currency to citizens in urban centers only , a resolution to introduce mobile bureaux de change branches which will spread out to rural communities was passed.
Members of the public will now be allowed to purchase US$100 per week as opposed to the usual US$50.
Another measure requested by MPs which will see pharmacies being allowed to access, using the official exchange rate, up to US$5 000 per month per firm for purchasing of pharmaceutical products from registered pharmaceutical wholesalers in Zimbabwe.
“The MPC was pleased with the favorable external sector performance as evidenced by a 49% increase in foreign currency receipts, from US$4,8 billion received during the same period in 2020 to US$7,2 billion as at 15 October 2021.
” Total foreign payments during the same period in 2021 amounted to US$5,4 billion, leaving a net surplus position of US$1,7 billion represented by foreign currency account (FCA) balances in the banking system,” added Mangudya.
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