,
5 tweets,
2 min read
Read on Twitter
Implications of the new measures (A Thread)
a) This will mop excess liquidity to the tune of $1.2b and in the process reduce pressure on the exchange rate since the payments will be done at 1:1 from the RBZ. Key issue will be availability of the forex to meet this quantum
a) This will mop excess liquidity to the tune of $1.2b and in the process reduce pressure on the exchange rate since the payments will be done at 1:1 from the RBZ. Key issue will be availability of the forex to meet this quantum
b) The move is mearnt to divert pressure that was coming on the exchange rate from borrowing customers. By increasing the cost of borrowing, the RBZ has limited credit creation and hence money supply. This is essential for exchange rate stability.
c) The removal of administrative limits on banks and beaureu de changes will allow them to correctly price foreign currency on their Buy and Sell Trades. As a result they are technically empowered to match the Alt Market. This move should deal a heavy blow to Alt Mkt activities!
d) A 90 day vesting period disqualifies holders of shares from disposing the same within the 90 day period. Effectively investors will not be able to speculate with easy. Importantly the move will address the challenge around the OMIR arbitrage!
e) The 50% surrender requirement will be a huge disincentive to exporters. However if the Interbank market rate will be competitive enough to match rates elsewhere in the market, then there wont be any loss in value to exporters on conversion to the local currency.
