Economy doomed by a runaway exchange rate

This week saw more price increases as the value of the Zimbabwe dollar further plummeted  on the parallel market  to between ZWL$16 000:US$1 and ZWL$17 000:US$1 from  ZWL$8 000 at the start of January 2024

On the formal market such as the willing seller-willing buyer, the Zimbabwe dollar was yesterday trading at ZWL$10 152: US$1, up from about ZWL$5 900 in January 2024.

For the majority of ordinary Zimbabweans, who receive their paychecks  in Zimbabwe dollars, which are steadily declining in value relative to the greenback and other major currencies, this spells doom.

This is a severe issue in the nation that requires immediate response in order to contain the scourge.

To worsen the situation, earnings are being eroded at a rate faster than what authorities are trying to portray.

There are so many complications.

Apparently, the Reserve Bank of Zimbabwe (RBZ) is facing mounting pressure to tighten the monetary policy and take action to curb the country’s rogue exchange rate and soaring inflation and there are still substantial upside risks to the forecast for both.

There is a serious panic in the market and the out-going RBZ governor, Dr John Mangudya, should come up with measures to deal with the crisis.

Dr Mangudya will step down from his role at the central bank in April and will be succeeded by Dr John Mushayavanhu, a former FBC Holdings CEO.

It is critical for Dr. Mangudya to come up with measures to deal with the runaway exchange rate that is pushing prices up.

The price of goods and services has consequently skyrocketed.

For individuals and businesses, the fact that the value of the Zimbabwean dollar has dropped to an all-time low since its reintroduction in 2019 is devastating.

Captains of industry are deeply concerned.

“The elephant in the room is the exchange rate stability and if governor Dr Mangudya puts in place measures that will arrest inflation and stabilise the exchange rate everything will fall in place,” the Confederation of Zimbabwe Industries president Kurai Matsheza  told Business Times yesterday.

 

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