Zimbabwe $ firms again
THE local currency firmed to below the 5 000-mark yesterday trading at $4 998 against the US dollar from $5 251 at last week’s wholesale foreign exchange auction rate, the fourth consecutive time.
This is a further indication of the market’s positive response to a series of policy interventions put in place by monetary authorities to mop up excess local currency liquidity.
The sustained strengthening of the exchange rate and prevailing stability is key as it sends a strong message to the market that stability will be durable.
A combination of fiscal and monetary measures has managed to mop up excess liquidity and create demand for the Zim-dollar.
Some of the recent strategic interventions made by the Government to tame volatility in the market are the directive for all import duties to be paid in Zimbabwe dollars, except for luxury items; the transfer of external debt obligations from the Reserve Bank of Zimbabwe (RBZ) to Treasury; and the introduction of the wholesale foreign currency auction for banks.
The Treasury has also since directed all Government institutions to collect fees and charges in the local currency.
Fifty percent of all US dollar corporate tax payments are now made strictly in the local currency, while the central bank raised its bank policy rate from 140 percent to 150 percent.
Expectations are that the exchange rate (official and parallel market), which recently took a battering from the negative impact of excess liquidity in the market, will strengthen in favour of the local currency going forward.
RTGS and USD money
On Tuesday, US$20 million was on offer attracting 10 bids worth US$5,8 million.
Of the amount of offer, only $5,6 million was allotted for eight bids.
Based on the Reserve Bank of Zimbabwe update, the highest bid rate received was $5 353 while the lowest was US$4 900.
The Zimbabwean dollar is on a positive trajectory, which has initiated some positive development in the economy which has seen the prices of basic goods declining as consumers continue to regain their purchasing power. Some retailers and Government agencies have already started reducing prices, in line with the firming local currency.
For instance, on Monday, bread at some retail shops, which was being sold between ZWL$7 500 and ZWL$9 000 a few weeks ago, was selling for ZWL$6 500.
Mr George Guvamatanga
A 2kg bag of sugar was selling for between ZWL$18 000 and ZWL$22 000 down from between ZWL$25 000 and ZWL$30 000.
Finance and Economic Development Permanent Secretary, Mr George Guvamatanga on ZBCtv acknowledged that prices of goods and services were going down across the country and that Government agencies were also following suit in adjusting their costs in line with the positive impact of policy measures.
He projected that going forward more stability will be entrenched.-chroicle.clzw
