Reserve Bank of Zimbabwe (RBZ) Governor, Dr John Panonetsa Mangudya has revealed that it is not possible to make any business plans if the rate is not stable. The Chancellor of the exchequer spoke exclusively to TechnoMag urging sanity and financial inclusion to stop currency instability which is man-made.
Dr. Mangudya said,
“Over the past four weeks, we have met with the business community to tell them that currency instability is not good for anyone, both businesses and consumers, because as a company it is not possible to plan if the rate changes every day,”.
The sentiments of the Governor of the RBZ are in tune with the calls of the local authorities that are part of the companies for the government to develop strong mechanisms that bridge the gap of trust and confidence in the economy to combat the threats of the exchange rate to economic instability.
Business lobby groups are of the view that government will find a rational mechanism to provide much-needed leadership to address threats of instability, the confidence and trust gap for better national competitiveness.
Despite the endless efforts of the RBZ boss and the Ministry of Finance and Economic Development, there has recently been a spike in the foreign exchange rate of the parallel market in the parallel market which in turn has led to high inflation levels.
RBZ Governor Mangudya established the Dutch auction system in June 2020 to meet the industry’s foreign exchange requirements after many local businesses resorted to the parallel market to meet their foreign exchange obligations.
Mangudya said that people are constantly reminded of the hyperinflationary environment they experienced in 2008, leading to a lack of confidence in the local currency among the general public.
He indicated that panic was leading people to constantly and unnecessarily hunt the US dollar, as a hedge against inflation, over preference for the local currency.
“We have tried to convince the public that colleagues have allowed us to use the local currency, we will not go back to 2008, but due to the polarization in this country, people are now using social media to remind people that we are now going back to 2008. .
“Whenever those messages are sent on social media it is not for love that they want to remind you of 2008 so that you panic and go to their market and buy foreign currency (for hedging) at an exorbitant rate,” the Governor recently said.