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Dual currency will continue says President


President Mnangagwa yesterday announced a raft of measures to make the Zimbabwe dollar a convenient medium of exchange in local transactions, while disincentivising use of the United States dollar, as Government moved to rein in market indiscipline and boost confidence in the economy.

Among sweeping interventions announced last night, lending by banks to both Government and the private sector was temporarily suspended, while cash withdrawals for amounts above US$1 000 will now attract a 2 percent levy.

The Reserve Bank of Zimbabwe (RBZ) was directed to settle all foreign currency auction system allotments within 14 days to improve confidence in the system.

The central bank will only be limited to auctioning off the funds it has.

Government believes the economy is in relatively good health and is “convinced that the recent exchange rate movements are being driven by negative sentiments by economic agents as opposed to economic fundamentals”.

The negative inflation expectations were feeding into further volatility of the Zimbabwe dollar as it created artificial demand for the US dollar, creating a vicious cycle in the process, which had to be broken, according to President Mnangagwa.