The Reserve Bank of Zimbabwe (RBZ) has clarified that only the interbank market has the authority to set the official exchange rate, resolving recent confusion surrounding the interpretation of “market-determined” exchange rates.
This clarification follows a misunderstanding by some Business Member Organizations in the tourism sector, which had interpreted the Monetary Policy Statement’s mention of “market-determined” rates as a signal that markets were free to set their own exchange rates, leading some traders to disregard the set rates.
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In a statement, RBZ Governor Dr. John Mushayavanhu emphasized that Zimbabwe operates under a floating exchange rate system, where the exchange rate is established in the interbank market via a Willing Buyer-Willing Seller framework. He explained that the rate is determined by authorized dealers (banks) based on their transactions.
Mushayavanhu further clarified that the “market-determined rate” refers to the rate set in the interbank market, which should guide the pricing of goods and services. He stressed that no other business entity outside the interbank market should set the exchange rate.
Additionally, he noted that the 5% trading margin referenced in previous guidelines only applies to the initial exchange rate when the ZWG was introduced, and that banks are allowed to resell foreign currency purchased from willing sellers (including the RBZ) at margins consistent with international standards.