Zim business caught offside as currency gain conti...

Zim business caught offside as currency gain continues

Government has rejected business’ plea for “space” to be allowed to sell at the old exchange rate for a few months, which would effectively keep inflation sky high.

“The policies are there to stay,” said George Guvamatanga, the Secretary for Finance and Economic Development in an interview with Bloomberg.
“We don’t do event-based policy. There was market failure in May, we used much bolder instruments. This is not election based.”

Guvamatanga said business had been capitalising on the desire by people to preserve value by dumping the local currency in the hyperinflationary period.

“People were going into supermarkets to buy goods as a way of dumping their Zimbabwe dollars — instead of getting 2 tubes of toothpaste, a person would buy the whole carton,” he said.
“Zimbabweans savings were sitting in pantries.”
The local dollar has recovered nearly half of its value against the US dollar over the past few weeks after a 90% fall.

As of July 20, the maximum rate business can use per US dollar is1:5 227

President Mnangagwa has publicly accused business of deliberately sabotaging the local currency. Government recently closed down pharmacies that where either refusing the local currency or charging highly speculative rates.

https://zimbabwenow.co.zw/articles/5320/17-pharmacies-to-lose-licenses-over-exchange-rate-policy-violations

Black market exchange rates rose to as much as 1:11 000 in May as the local unit collapsed to a record low on the official market pushing inflation to above 175% in June.

The central bank liberalised the foreign-exchange market in June, hiked rates and made tax changes bringing the currency to 1:4 876 this week

President of the Bankers Association of Zimbabwe Lawrence Nyazema believes that stability will prevail with the market gaining confidence in the rebound of the local currency.

“The rate had run ahead of itself. It had over-depreciated,” he said, adding that the association sees 5 000 Zimbabwe dollars against the greenback as fair value.

“It took us two weeks before banks were all operating at the same rate, but it will take much longer in the wider market.”