This dovetails into the forecast by Finance and Economic
Development Minister Mthuli Ncube that the economy will grow by 7,8 percent
this year, revised upwards from 7,4 percent predicted in November last year,
driven by a bumper harvest, decent global metal prices, hence strong exports,
and more construction happening across the country.
Mr Guvamatanga said the balance between the key economic
fundamentals would, ordinarily, lead to a more stable and stronger exchange
rate, contrary to what is happening where the local unit lost some ground
against the greenback on the black market.
While the exchange rate remains largely stable on the
formal market at about $88 per US$1, the rate has depreciated to as high as
$170 per US$1 on the black market, at the seller’s rate, which is far higher
than the buyer’s rate. However, the black market appears to have peaked and
started retreating slightly.
Mr Guvamatanga said
the authorities were aware of the factors causing the volatility and were in
the process of fixing them.
The RBZ last week held meetings with business leaders and
reached a number of concessions to deal with exchange rate instability on the
black market and its potential negative effect on price, as this could put many
goods and services beyond the reach of low income groups.
The central bank highlighted that there was no basis for
exchange rate volatility in an environment where the key fundamentals were
strong. The bank shared similar sentiments as Mr Guvamatanga that the issues
affecting the exchange rate centred on behaviour not economic factors.
Earlier this month, the bank named and shamed a number of
individuals allegedly abusing mobile bulk payer lines to illegally trade in
forex, thereby fanning rate instability.
Exchange rate volatility, reined in when the Reserve Bank
of Zimbabwe launched the foreign currency auctions last year, helped in the
discovery of a market rate, stabilised prices and inflation; but some price
increases have lately threatened to dilute the gains.
Speaking in an interview with The Herald in Dubai, United
Arab Emirates, after touring Zimbabwe’s pavilion at Expo 2020 Dubai, Mr
Guvamatanga said the fact that the economy was in a better condition than it
has been in a long time would be a gross understatement .
“To say that we are in a better position is actually an
understatement. I think we are in a very great position. I think if you look at
our trade numbers, which were released by the monetary authorities, which
provided the numbers as at August 7, actually showed that our exports have
grown by over 36 percent year on year, largely driven by strong global
commodity prices as well as diaspora inflows,” Mr Guvamatanga said.
The growth in exports, Mr Guvamatanga said, had resulted in
Zimbabwe recording a positive external sector position. While imports have
similarly grown during this period, their increase has been slower than the
inflows of US$5,4 billion and exports of around US$3,8 billion.
The national Treasurer said this scenario had culminated in a surplus of more than US$1,7 billion on the current account, which was available within banks as ‘hard currency’. We are holding over US$1,7 billion, so it is the strongest external position we have had over many years. Herald
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