An Investigation Into the Effects of Central Bank Regulation on Exchange Rate Case Study of Zimbabwe From 1980–2019

Abstract

Foreign exchange interventions as a possible tool needs to be assessed taking into account both the design and implementation of monetary policy for this reason, the forms of foreign exchange intervention and their effectiveness in achieving exchange rate ,since there were limited foreign exchange restrictions and less direct government controls in the foreign exchange market before (Rossini et al (2013). During the period 1991 to July 1994, a two-tier exchange rate system was used one quoted by the Reserve Bank of Zimbabwe (RBZ) and the other one determined in by inter-bank market. Following the demise of the Auction System, the Reserve Bank of Zimbabwe announced the Tradable Foreign Currency Balances System (TFCBS) on 24 October 2005.Initially foreign currency was only accessed from banks and was later decentralized resulting in the licensing of several Bureau de Changes across the country in 2002 to 2013 era. There were several policy revisions, reversals and even de-licensing bureau de change.