Zimbabwe floats currency
Staff reporter
Wed, 30 Apr 2008 22:58:00 +0000
ZIMBABWE has decided to float its local currency on foreign exchange markets in an attempt to eliminate speculation on the black market, the governor of the Central Bank said Wednesday.
"The Reserve Bank has with immediate effect introduced a willing buyer-willing seller... arrangement in the foreign exchange market," governor Gideon Gono said at a news briefing.
The official exchange rate in Zimbabwe has been kept at 30,000 Zimbabwe dollars for one US dollar since September 2007 -- but on the thriving black market, one US dollar can be exchanged for around 100 million Zimbabwe dollars.
Gono said that with the new reforms, "the availability of foreign exchange will gradually improve to a point not experienced over the last few years."
This is the second time in four years the country has opted to liberalise its foreign exchange trading system.
In January 2004 Zimbabwe introduced a foreign exchange auction system in which the central bank determined the rate in a bid to narrow extreme differences between the official and parallel rates.
Economic experts said the move was long overdue.
"It was a very bold and welcome move. It will work for the economy," John Mangudya, chairman of the Bankers Association, told AFP.
"There was no need to continue starving the economy" of foreign exchange.
He said bankers were due to meet on Friday to decide on rates from which trading could kick off.
AFP
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