Story by Owen Mandovha, Business Reporter
Government says it is closely watching business entities manipulating the exchange rate by using black market rates, saying the practice does not reflect the fundamentals of the ZiG currency which is backed by gold.
The ZBC News crew witnessed a growing trend in the market where formal businesses are limiting acceptance of the ZiG, while others are resorting to shrewd ways of circumventing the interbank rate of 13.56 by dual pricing.
One big wholesaler has become notorious for using the black market rate when customers swipe in local currency.
Economists have also noted this growing practice where businesses are now distorting the market.
Zimbabwe National Chamber of Commerce chief executive officer, Mr Christopher Mugaga said, “Indeed as big business we are witnessing those uncouth practices that are currently being employed by retailers and wholesalers in the market. The ZiG has been widely accepted and the premium of the formal rate has largely widened, which requires business to work together.”
Ecpnomist Mr Titus Mukove said, “There is no need for business to panic and this was expected that once the ZiG is used widely, there was going to be some destabilising effects of the local currency, whereby the de-dollarisation of the ZiG has happened so quickly, so there was need to monitor such a trend.”
Treasury has also noted the disturbing trend, adding that measures are being put in place to deal with malcontents.
“Indeed this is what is happening in the market by some unscrupulous businesses, not all of them, but we are taking note and will act decisively. But remember, we need to consult and do so in a manner that does not disrupt the acceptance and performance of the ZiG so far. I can tell you there is no reason why the ZiG should be devalued because it is backed by gold and foreign currency reserves,” Permanent Secretary in the Ministry of Finance, Economic Development and Investment Promotion, Mr George Guvamatanga said.
In the same vein, economist Mr Persistence Gwanyanya believes the increased use of the ZiG should be met with more foreign currency injection by the central bank to manage supply shocks.
“The rate at which the ZiG was accepted was unprecedented and at the moment, the ZiG transactions are accounting for almost 40 percent unlike just less than 5 months ago when the US dollar transactions were almost 90 percent. It means that we now need to underwrite that de-dollarisation by mopping the ZiG currency in the market so as to maintain its value,” he said.
With the seamless adoption of the new ZiG currency now accounting for a large chunk of transactions in a short space of time, economists note the need for expeditious application of measures to support currency stability.
