VP Chiwenga Calls For Calm Amid Decline Of Zimbabwe Dollar

7 months agoWed, 26 Apr 2023 17:46:23 GMT
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VP Chiwenga Calls For Calm Amid Decline Of Zimbabwe Dollar

Vice President Constantino Chiwenga has urged the nation to be calm in response to the sharp decline of the Zimbabwe dollar compared to the United States dollar (USD).

Speaking at the Zimbabwe International Trade Fair (ZITF) International Business Conference in Bulawayo this Wednesday, Chiwenga said the government will continue to pursue measures to maintain exchange rate stability.

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He acknowledged the current exchange rate volatility but assured that it was temporary and exchange rate movements were not catastrophic. He said:

Bold measures are being implemented by Government to foster price and exchange rate stability in the economy.

These measures include tight monetary and fiscal policy, insistence on value for money for Government procurement and effective monetary and surveillance by the Financial Intelligence Unit (FIU).

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The transitory exchange rate volatility in the parallel market witnessed in the economy for March this year is merely a reflection of the store of value demand for foreign currency.

Vice President Chiwenga stated that Zimbabwe has been experiencing an increase in foreign currency inflows, with a peak of US$11.6 billion in 2022, up from historic averages of around US$5 billion to US$6 billion per year. He added: 

So, there is no point in rushing as though the world is coming to an end.

Reflecting this positive development, the country has also been recording current account surpluses since 2019, a critical condition for currency stability.

As such, Government is staying the course of the current monetary and fiscal policy measures which have proved effective in restoring and sustaining price and exchange rate stability.

According to Vice President Chiwenga, the Reserve Bank of Zimbabwe (RBZ) is expanding investment options for individuals and corporations with excess Zimbabwe dollar balances.

He added that the Central Bank is planning to introduce “gold-backed digital products” to complement the Mosi-oa-Tunya gold coins currently available. The former military boss said this initiative will allow for the widespread trading of gold coins, expanding the tradable assets in the economy for storage purposes and reducing the speculative demand for foreign currency.

His remarks come as the black market exchange rate for the local currency has moved to between $1 800 and $2 100 to the US dollar, compared to the official rate of $1 021.

The decline of the Zimbabwe dollar has resulted in businesses raising the prices of their commodities as they price their products at double the official market.

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