Reserve Bank of Zimbabwe (RBZ) governor John Mangudya yesterday declined to increase cash withdrawal limits to match recent price hikes, as he battled to limit cash in circulation in order to fight inflation.
In his Monetary Policy Statement (MPS), the RBZ chief moved cash withdrawal limits to only $5 000 per week, from $2 000 previously, saying he would continue pursuing a tight grip on liquidity to push back mounting headwinds.
Confirming that authorities had been unsettled by currency fragilities, Mangudya whittled down quarterly reserve money targets to 7,5% from 10% to stabilise the free-falling domestic unit.
However, a weekly cash withdrawal limit of $5 000 is still a drop in the ocean in a market characterised by weekly price increases.
It was clear the central bank chief had little room to manoeuvre.
In the run-up to his presentation, it had become clear that even the weekly mobile money withdrawal limit had fallen far below market demands.
The RBZ chief was under pressure to increase it by wider margin to give respite to an increasingly suffocating consumer base.
But even on this front, he was edgy; effecting only small changes, which leading economists said would have minimal significance.
He increased weekly mobile banking transaction limits for person-to-business to $25 000, from $20 000 previously.
“(The RBZ is)…increasing the limit on mobile banking transactions as follows: (a) person to business from $20 000 to $25 000 per transaction with a maximum limit of $100 000 per week; and (b) person to person from $5 000 to $10 000 per transaction with a limit of $70 000 per week,” Mangudya said.
Newsday