Interventions on foreign exchange market take shape

By Stanley James

Business Editor

GIVEN the need to find a long-lasting solution over the current widening gap between the parallel market rates and the official exchange rates the Reserve Bank of Zimbabwe will be meeting captains of industry on Monday.

The RBZ Governor Dr John Mangudya revealed in a written response to inquiries from the Zbc News that the meeting which will be attended by business representatives, retailers, production value chains and bankers seek to identify the current factors behind the widening gap between parallel market rates and the official market rates.

His sentiments are being made when the government is intensifying its crackdown on alleged illegal foreign currency dealers fueling the parallel market rates in the economy leading to the current wave of pricing distortions.

Proposals submitted to the central bank by industry and commerce indicates the need to come up with a workable formula to balance the act between sustaining the foreign exchange market with adequate foreign currency.

The Central Bank Governor told a human resources practitioners symposium in Nyanga over the weekend on how the parallel market rates are threatening gains of stability as well as interventions being made to address the challenges.

“Our inflation in this country is caused by the exchange rate movements, when the rate goes up the parallel market there is the pass through effect.”

Central Bank authorities have therefore taken further steps to ensure the current gains of stability are maintained. 

“We need to deal with the people causing it to ensure our exchange rate is stable, we are also reducing money supply to entities that we believe are contributing to inflation.”

Despite the challenges obtaining within the country’s exchange rate markets, which have resulted in annual inflation targets being reviewed, the central bank has however revealed that the economy is still on course to achieve a 7, 8 percent growth rate by end of this year.

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