Bankers Call Out Zimbambwe’s Stabilization Measures

Bankers Association of Zimbabwe (BAZ) has called out new exchange rate strengthening measures by the country’s central bank, which devalued the local unit of exchange.

IOL reports that Reserve Bank of Zimbabwe (RBZ) last week devalued the Zimbabwe Gold currency, seeking to tame a runaway parallel exchange rate.

After retailers complained of monetary and pricing distortions following the wider parallels between the official exchange rate and the street exchange, the RBZ hiked the policy rate from 25% to 35%.

However, banks in Zimbabwe have now said the new measure has potential to see an increase in non-performing loans in addition to driving up the cost of capital, with the higher borrowing costs set to defer investment and expansion of businesses.

Banks in Zimbabwe include units of South African finance institutions, such as Standard Bank, Old Mutual and Nedbank, among others.