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Treasury and monetary authorities find winning formula

Story by Owen Mandovha, Business Reporter

ECONOMIC experts have commended monetary authorities for finding a winning formula which has successfully tamed inflation while stabilising the value of the Zimbabwe dollar.

Month-on-month inflation for September has receded to around 0.95% from as high as 74.5% in June this year on the back of stabilising prices.

In an economy where prices are uncommonly indexed to exchange rate movements, analysts have commended the joint efforts of treasury and monetary authorities to keep liquidity in the economy at optimal levels through a tight monetary policy stance coupled with other measures to create demand for and use of the Zimbabwe dollar.

“Prices have largely stabilized over the last 4 months and consumers are now settled when it comes to price increases. The authorities should be commended for stabilizing the Zimbabwe dollar which had spiralled out of control but the support by the RBZ to the forex interbank as a way of liberalising the forex trading has borne fruits in terms of availing more foreign currency through official channels,” said Confederation of Zimbabwe Retailers president, Mr Denford Mutashu.

While applauding authorities for maintaining fiscal discipline, economic analyst, Mr Prosper Chitambara is of the view that the gains achieved so far cannot be sacrificed through unnecessary policy misalignment.

“The fiscal discipline that has been consistently displayed by the government means there is no hot air in the economy meaning that drivers of exchange rate fluctuations are controlled. However, there is a need to maintain the trajectory in a manner that restores the value of the Zimbabwe dollar,” he said.

A sustained wave of price hikes engulfed the economy during the middle of the year which were successfully reversed by a combination of measures by the Treasury and the Reserve Bank of Zimbabwe.

This has seen the Zimbabwe dollar trading on average at 5 592 to the greenback after rates had skyrocketed to around 10,000 to the United States dollar on the parallel market in June this year.

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