The Sunday Mail
Debra Matabvu
THE Reserve Bank of Zimbabwe (RBZ) has moved in to address the loss of value of the local currency on the parallel market after engaging business leaders on Friday to home-in on strategies that will curtail inflation and maintain price stability.
On Friday, RBZ governor, Dr John Mangudya, held a no-holds-barred meeting with manufacturers, retailers and other business leaders to address issues related to price stability and volatility of the local currency against the US dollar.
The meeting, which marked the first deliberations between the RBZ and business leaders in 2022, saw all parties agreeing to protect consumers by reining-in on wanton increases of basic goods and services.
Some retailers, including major shops, are pegging their prices against the parallel market, where the rate of the US dollar to the local currency has slid to over $200 to US$1.
On the official RBZ auction rate, the exchange rate is pegged at $112 Zim dollars (ZWL) to US$1.
In an interview with The Sunday Mail on Friday, Dr Mangudya said the meeting with the manufacturers and retailers was a follow up to the October 2021 deliberations last held by the parties.
Dr Mangudya said one of the major outcomes of the meeting was the agreement by all parties to adopt measures that will increase the demand for the local currency.
It is envisaged that increasing the demand for the local currency will ease appetite for the US dollar, thus curtailing the plummeting of the ZWL against the greenback on the parallel market.
“There seems to be a preference to hold on to the USD by citizens as a medium of exchange,” Dr Mangudya said.
“This has led to currency volatility so Government is coming up with a number of measures that are meant to increase demand for the currency so that it increases its value.
“In the meeting we also agreed that there is a need for moral suasion in the country. In the banks we have noticed that 66 percent of the total money in the banking system is local currency. Even the duty revenue from ZIMRA is about 30 percent local currency. This is a positive sign, so we are going to increase demand and ensure that the value increases as well.”
The meeting underscored the need to maintain the macroeconomic stability which has prevailed over the past 12 months.
Dr Mangudya also said the impact of the Government’s policy measures to promote local industries were beginning to bear fruit with the country witnessing an increase in locally manufactured goods.
“The meeting with the business community was a continuation of the last meeting we had in October.
“The parties underscored the need to maintain the macroeconomic stability momentum experienced.
“We also discussed how to increase locally manufactured goods. Locally manufactured goods have increased to between 82-85 percent in major supermarkets which is a positive sign. Exports are also on the increase which means our strategies are working. So the meeting was on the various strategies to be used to tackle inflation and ensure price stability.”
Dr Mangudya also said RBZ is continuing its investigations against currency manipulators, with the culprits set to face the music.
Some businesses have been manipulating the currency by setting their Zimbabwe dollar prices to black market exchange rates, with some shops pricing their goods and services using illegal rates ranging from US$1: $180 to US$ 1: $210.
Speaking to The Sunday Mail yesterday, Confederation of Zimbabwe Retailers (CZR) president Mr Denford Mutashu described the meeting as fruitful as the deliberations had focused on mechanisms that were being put in place to ensure that prices remain stable.
“We met with RBZ yesterday (Friday) and this was a follow up and progress review to the meeting that we had in October. There was commitment by both parties to ensure as much as possible the availability of goods and services in local currency so that we reduce the dependency on USD. The RBZ also assured us of sufficient foreign currency to cover and support the local currency.
“We also discussed abuse of auction system and the multi-tier pricing system in retail, medical and education sectors. There are mechanisms that will be put in place to ensure that we root out such practices.”
The Confederations of Zimbabwe Industries (CZI) national president, Mr Kurai Matsheza said:
“It will be improper for us to comment before the RBZ releases an official statement. We will be able to comment once the statement has been released.”
