RESERVE Bank of Zimbabwe (RBZ) Governor, Dr John Panonetsa Mangudya, seems unperturbed in eliminating the distance between the country’s currency’s official and parallel market rates, pointing fingers at businesses for the disparity.
To have the official rate move to match the parallel market rate is “like chasing one’s tail,” according to the RBZ Governor Dr Mangudya. The unofficial rate will only surge even higher, decimate the earnings of citizens and lead to price hikes in the southern African nation, where annual inflation was 61% in December,” he said.
“People just want to hold US dollars,” said Dr Mangudya.
While the Zimbabwe dollar has been allowed to gradually weaken from parity with the greenback in February 2019 to 112 to the dollar yesterday, it trades at 230 to the dollar on the black market, stoking inflation.
Industrialists have also pointed the disparity on lack of foreign currency supply with RBZ boss Dr Mangudya insisting it’s due to many businesses accepting payment in US dollars at the unofficial, or parallel market, rate.
“We would love convergence, but it requires the business community to also walk the talk,” Mangudya said yesterday in an interview in the capital, Harare. “Convergence must be at a realistic exchange rate.”
A weekly foreign currency auction run by the central bank boss resumed yesterday after more than month-long gap over the Christmas holidays.
Industry insist it is at the receiving end of the currency rate disparity. It struggles to obtain the foreign currency, which it needs to keep operations running, and is forced to turn to the parallel market.
The Confederation of Zimbabwe Industries, the largest business lobby group in the country, in October warned a policy response from authorities was needed to save the local unit from collapse.