The horses have bolted | Business Times

The depreciation of Zimbabwe dollar, at an exceedingly higher pace, has continued despite latest measures by the government to stem the free-fall.

Last week, the central bank began selling foreign currency to banks at a market-determined exchange rate in a bid to strengthen the foreign exchange interbank market.

It said the measure was meant to make the interbank forex market as the primary source for foreign exchange needs in the economy.

The parallel market rate has remained unnerved with rates of between ZWL$9,000 and ZWL$10,000 yesterday against the ZWL$5,978.6794 that obtained on the interbank market.

“Street economists” have without doubt outsmarted the real ones in suits and plush offices.

Critics say the redollarisation juggernaut is unstoppable despite insistence by authorities that the Zimbabwe dollar is here to stay.

Prices quoted in local currency have become so outrageous that one will opt to pay in the United States dollar.

Government has in the past week rolled out measures to stabilise the exchange rate.

Finance minister Mthuli Ncube ordered parastatals, ministries and government agencies to charge fees in local currency to support the use of the Zimbabwe dollar as statistics show that seven out of 10 transactions are in United States dollars.

Over the weekend, President Emmerson Mnangagwa upped the ante, accusing some sections of business of deliberately increasing prices as part of a regime change agenda telling businesses to “stop the nonsense”.

It is a strong accusation and however, not first of its kind.

The late former President Robert Mugabe saw business as cannon fodder; even in circumstances the situation was aggravated by the government’s profligacy.

Prices have not stabilised despite Mnangagwa’s call. The galloping prices of basic commodities have eroded disposable incomes putting pressure on employers to review salaries to be abreast of the cost of living.

It is a tall order for employers as they have to grapple with other constraints such as unreliable power supplies, rising inflation and the high cost of production.

For exporters, they are battling to wholly retain their export proceeds arguing that the 25% retention threshold is unviable. They argue that the economy has dollarised and there is no need to keep retention in place.

The common denominator in what is obtaining in the economy is the confidence deficit in the local currency.

The market has lost confidence in the local currency. As we report elsewhere in this edition, some basic commodities are disappearing on shop shelves as suppliers opt for those that pay promptly and in a stable currency.

The government is working on a dedollarisation plan in which the Zimbabwe dollar will be the sole currency. It is confident the local currency will rebound. It could be too little too late to close the stables. The horses have bolted.

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