Sundaymail Editor
Business Reporter
Joint efforts between the Government and other stakeholders to restore confidence in the economy will help eliminate speculative behaviour on pricing and exchange rate movements, business has said.
Reserve Bank of Zimbabwe (RBZ) Governor Dr John Mangudya maintains that volatility in prices and the exchange rate are caused by “behavioural issues”.
The central bank and business had a review meeting on January 21 to take stock of commitments made at their previous October 11, 2021 meeting.
The consultative engagement discussed ways of enhancing price stability and the exchange rate.
Confederation of Zimbabwe Retailers (CZR) president Mr Denford Mutashu said the improved circulation of the local currency in the mainstream economy will be paramount to maintain exchange rate stability.
“It takes all of us as a nation, stakeholders and Government, to realise that a country without its own currency is doomed,” he said.
“It is paramount that in line with efforts to reduce inflation, a lot more needs to be done.”
He said it was critically important to continue supporting productive sectors of the economy to increase supply of local goods on the market to an average 80 percent from the current 70 percent.
According to Dr Mangudya, at the recent meeting, the Government and the central bank made an undertaking to come up with strategies to enhance the attractiveness of the local currency and promote its demand.
In line with the commitment, the central bank would continue to refine the foreign currency auction system and timely settle allotments.
“As a way of continuing with efforts to stabilise the economy, there was need for everyone, through a collective responsibility, to exhibit good leadership and exercise restraint on the volatility of the foreign exchange rate,” said Dr Mangudya in a statement.
Fighting inflation through restrictive monetary policy and building foreign exchange reserves to defend the value of the local currency will also be prioritised.
Banks were encouraged to ensure compliance with provisions of Statutory Instrument 127 of 2021 — now embedded in the Finance Act (Amendment Number 7 of 2021) — which, among other things, emphasises the importance of avoiding abuse of auction rules and funds from auction allotments.
They were urged to avoid exchange rate manipulation and non-compliance with the Bank Use Promotion Act.
“The Government has to come up with appropriate incentives for exporters to improve production and productivity,” added Dr Mangudya.
The Financial Intelligence Unit (FIU), he said, would continue penalising currency manipulators and abusers of foreign currency auction rules and breaches of the Bank Use Promotion Act.
Confederation of Zimbabwe Industries (CZI) president Mr Kurai Matsheza said should the RBZ implement the key resolutions, the outstanding issues will be resolved.
“If the resolutions are implemented, they will 100 percent address issues confronting industry that are limiting the manufacturing sector’s capacity,” he said.
Exchange rate stability, he added, should be a key priority as it has been affecting industry and the economy at large.
Experts say in order to sustain the obtaining economic stability, the Government should double down on stabilising the exchange rate and adopt a system that will deal with supply and demand for foreign exchange on time at an agreed market rate.
Economist Mr Clemence Machadu
said the country can grow its exports
through broadening its markets and value addition.
“Also noting how our top exports are all dominated by raw materials, it is important that we increase the export of value-added products, and this should be also supported by fully implementing the Zimbabwe National Industrial Development Policy,” he said.
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