Mangudya speaks on forex crisis

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Reserve Bank of Zimbabwe Governor Dr John Mangudya

What is currently draining the country’s nostro balances in the absence of grain imports and while at the same time exports are going up

Answer
The situation is that demand for forex has gone up on account of the rebounding of the industrial sector which is in great need for feedstock, the bumper harvest has also increased the demand for the manufacture of grain bags and tarpaulins to the extent that all the local producers are working flat out without meeting demand from GMB. The raw materials are all imported and so are the grain bags to supplement local production. Electricity imports also went up.

In short, the increase in demand for forex is the down side impact of a rebounding economy. Demand for forex increases with an expanding economy especially given the current average import content of around 50 percent of Zimbabwe’s industrial sector.

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