guest column :Eddie Cross THE mid-term monetary policy statement (MPS) from the Reserve Bank of Zimbabwe (RBZ) is well worth a read. This is the first overall review following the formation of the monetary policy committee (MPC) in August 2019. I was privileged to be a member during the period covered by the report. Yesterday, I got a call from a group of young Zimbabwean professionals in the United Kingdom and I was struck by something they said to me in their opening remarks. They said: “We can do little about the toxic politics of our country, but we can do something about the economy”. I suddenly realised that that is exactly where I am at this time in our history. A few highlights from the MPS. Firstly, the stability on the foreign exchange market since the adoption of the foreign exchange auction in June. This was advocated by the MPC from its inception and after a couple of failed attempts, the President stepped into the ring and told us to stop messing around and get it done. It was implemented in a week. Nine weeks have followed and the auction with its price discovery mechanism, has stabilised a market that was simply running away with itself. In fact, in the past two weeks we have seen a slight, but significant shift, in that we have been able to put enough money on the market to meet demand in full and exchange rates have strengthened. We have argued for nearly a year now that the fundamentals do not support the exchange rates that are being demanded in the informal markets. While the auction has demonstrated that, the rates are still way above what they should be and if we were able to put more money on the table, the prospect is that the rates would strengthen radically. I think there are many in the country who now recognise that reality and many express concern. If you have been buying US dollars on the streets to protect value at 110 to 1 and the rate is now 90 to 1 because of the auction, you have lost a considerable sum of money. What if it goes to 40? It is my view that the RBZ will have to consider buying hard currency off the market if rates collapse, to hold exchange rates at a level that will maintain our international competitiveness and stabilise the economy. Wild swings in rates serve no one. The second development that is covered in the MPS is data that shows we were right to clamp down on the electronic money trading systems that had developed over the past decade but were now being used to buy hard currency at unjustifiable rates. It is one thing to be able to use your phone to send a $1 000 transfer to your family, or to pay staff, it is quite another to transfer a hundred million dollars to a money transfer agency and instruct them to buy hard currency for you. We have said that the inflation being experienced in 2020, is quite different from the hyperinflation era of 2004 to 2008. The latter was due to the reckless printing of money by the RBZ. The inflation we have seen since July 2018 is due to the depreciation of the local currency. That was unavoidable in the early days as we had