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“The Bond Note Did Not Fail”: RBZ Governor John Mangudya

In an interview with a local publication, central bank governor John Mangudya denied that the bond note lost value against the US dollar.

He said it was not the bond note that lost value but inflation rates went up in October last year.

Mangudya who is on record saying he will resign if bond notes failed, denied that the currency failed.

Below is an excerpt of the interview:

“……. What happened is that the fundamentals of the economy were changing significantly in October. Let us just call a spade a spade. The parallel exchange rate in June was at a premium of $1 200 to $1 800 during the year 2018 up to September. Therefore, the bond did not lose much ground at that rate. Fast forward to October, the fundamentals changed, inflation went up by 5%.

All these incentives were higher than inflation, so it means it was a real incentive. Inflation went up to 20% in October, now 42%. It is not the bond note which has lost value; it is inflation which has gone up. We can no longer sustain that anymore. We now want to fix the inflation. Fix the rate. Stabilise the exchange rate.”

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