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WE are worried that the country’s economy can be held hostage by a bunch of speculators who can cause the collapse of our currency within their shadowy operations. We are equally alarmed that these same characters can connive to determine the exchange rate outside the influence of the Reserve Bank of Zimbabwe, torching volatility on the market and wreaking havoc on the pricing of goods and services.
Zimbabweans were last week subjected to a dramatic fall in the value of the Zimbabwe dollar (RTGS$) which weakened against the United States dollar, plunging from around 1:14 to peak at around 1:24 with indications that it could have weakened further had monetary authorities not taken drastic measures to halt the slide. Prices of goods and services followed in tandem with retailers adjusting their prices almost hourly in response to the falling rate.
What followed was carnage on the market with the prices of basic commodities skyrocketing within a short period time. The price of mealie-meal rose from $27 to $48, cooking oil from $28 to $40, bread from $6,90 to $9 and a 2kg bag of sugar from $17,22 to 23,90 following the sharp increase in the exchange rate.
On Friday, the RBZ Financial Intelligence Unit froze the accounts of some of the companies’ suspected to be behind the exchange rate volatility. This caused the exchange rate to immediately plummet and by the weekend, it had stabilised at around 1:14 but retailers did not readjust prices to their previous levels. This is causing untold suffering to the majority of Zimbabweans as their disposable incomes have been substantially eroded.
It is regrettable that the actions of these rogue companies who flooded the market with RTGS dollars to mop up US dollars has caused irreparable damage to the economy and we feel Government should come down hard on them. With their identities out in the open and evidence there for all to see that they were behind the exchange rate volatility, isn’t it time authorities acted decisively to curtail their nefarious activities? Their greed and voracious appetite for ill-gotten wealth cannot override the interests of the majority of Zimbabweans toiling hard to earn an honest living.
President Mnangagwa’s administration is anchored on transparency, honesty, hard work and openness. It is indeed a new dispensation which prides itself in having discarded the ways of the past where rent seeking behaviour and corruption were the order of the day.
To his credit, the President has shown that he abhors corruption and has spared no one in cracking down on the vice. Of course, more needs to be done to completely eradicate the scourge but so far the Government has demonstrated its willingness to tackle the problem head on without fear or favour. In this regard, we urge monetary authorities to intensify investigations into the activities of companies engaged in the black market forex trade with a view to prosecuting them.
It is common cause that the majority of illegal foreign currency dealers lining the streets of Harare and Bulawayo are mere runners doing the bidding of cartels and some reputable companies. We believe authorities have the ability and wherewithal to put a stop to their activities because the majority of their transactions are conducted through the formal banking system and mobile money services.
It is therefore possible to track the movement of large sums of money to the streets where runners get their daily “floats” and surrender their US dollar “earnings” at the end of the day. Government will also be interested to note that these same dealers receive their daily rates from these same cartels. Perhaps it is time monetary authorities promulgated tougher measures to regulate banks, bureaux de change and other financial institutions to instil discipline in the market.
The RBZ should also strengthen the interbank market and make sure it operates in a manner that is both flexible and attractive to clients. It is time the monetary authorities took back control of the market. In the same vein, Government should move to protect the local currency by clamping down on indiscipline in the market. A stable currency is crucial for economic growth and is central to the success of the Transitional Stabilisation Programme and Vision 2030.
We therefore commend President Mnangagwa for outsmarting some individuals and companies that were behind the sharp rise in foreign exchange rates. Briefing Zanu-PF supporters from North America on political and economic developments in Zimbabwe during an interactive meeting in New York on Saturday, President Mnangagwa said the Zimbabwean dollar, which was introduced as a mono-currency in June this year, performed well in its initial stages only to face wanton assault by some elements in the economy which saw the exchange rates inexplicably rising, thereby causing a price spiral in goods and services.
“On the monetary side, yes, we have introduced one currency,” said President Mnangagwa. “For the first six weeks it remained stable, but then our people are intelligent. We have people who found ways to fight that (stability of the currency) and undermine it, but yesterday (Friday) we also became smarter than them and so we took some action.
“We have now arrested the galloping rate which was galloping from about eight, within few days it had gone up 10, and 20, by the time we left it had gone down and I think today it is about 14.”
Online Reporter