This is seen as a strong indication of the market’s
positive response to a series of policy interventions put in place by monetary
authorities to mop up excess liquidity and restore macro-economic stability.
The stability of the exchange rate is expected to anchor
price stability going forward, experts say, and drive the demand for local
currency in domestic transactions, which economic agents have lately been
avoiding due to its volatility.
The development has already halted price increases thereby
easing the pressure on consumers who expect the prices to drop in the short to
medium term.
Based on the Reserve Bank of Zimbabwe (RBZ) update
yesterday, the highest bid rate at the wholesale auction system received was $5
550 to the US dollar down while the lowest was $5 200.
This is a huge drop when compared to $6,926 in the last
three weeks.
Economic analysts say the sustained strengthening of the
local currency is critical for stabilising the market, restoration of consumer
purchasing power and sustaining adequate aggregate demand for products and
services.
A snap survey conducted by our news crew in yesterday
revealed that more business that previously pegged prices exclusively in forex,
are now enticing customers to transact in local currency. This comes at a time
when big supermarkets are now rejecting South African rand coins, preferring to
use Zimdollars.
A number of small retail outlets have also embraced the
local currency and are seeking to acquire Point-of-Sale machines (POS). Several
of these businesses have now put notices at their premises indicating that they
now accept mobile money payment and swipe.
In the past such businesses, mostly located in the downtown
district, led the defiance against using local currency but are now selling
their products using the multi-currency and are mostly applying the prevailing
bank rate. However, some who have embraced the local currency were using a high
parallel market rate of above 1:7 000, which is a drop from a peak of about
1:10 000.
“The Zimdollar is now honey. It has restored its
attractiveness. Kudos to His Excellency President ED Mnangagwa for raft of
measures to shore up stability,” said Confederation of Zimbabwe Retailers
president Mr Denford Mutashu.
In its latest inflation and currency development update,
the Confederation of Zimbabwe Industries (CZI) also said the measures
introduced by the Government have halted the free fall of the local currency,
making it important for the Government to stay the course and fully implement
the measures.
It noted that the liberalisation of the exchange rate has
managed to shrink the monthly average exchange rate premium from 92 percent in
May 2023 to 38 percent in June 2023.
“What is critical now is ensuring that the implementation
of the current reforms is geared at convergence between the official and
parallel market first and then the appreciation objective follows,” said CZI.
An elderly woman who runs a formal apparel shop in
Bulawayo’s downtown district acknowledged the need to embrace the local currency.
“As long as I benefit from you, you will also benefit from
me. This is your country and I am trying to make a living. We have to learn to
respect your economy as I would want you to respect mine,” she said.
“I will charge you in US dollars but I will convert it to
the prevailing and legal bank rates. Please tell your family and friends to
accept what our community seeks to promote.”
While she and her fellow community members shared the same
ideas and sentiments, such was not the same with local “greedy” entrepreneurs
who recently priced their goods using obscene black-market rates of above $10
000 to the USD.
The recent strategic interventions introduced by
authorities include a directive for all import duties to be paid in Zimbabwe
dollars, except for luxury items, transfer of external payment obligations from
the Reserve Bank of Zimbabwe (RBZ) to the Treasury and introduction of the
wholesale foreign currency auction for banks.
Further, the Treasury has also directed that all Government
institutions must collect fees in local currency and also charge for services
in local currency. It also said 50 percent of corporate tax payments should be
made in Zimbabwe dollars while the Central Bank raised its bank policy rate
from 140 to 150 percent. Herald
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