‘Exchange rates moving towards convergence’

Sunday Mail Reporter

RETAILERS are predominantly using the official exchange rate, which is increasingly moving towards convergence with the parallel market rate, leading to the relative stability of prices on the market, the Reserve Bank of Zimbabwe’s Financial Intelligence Unit (FIU) has said.

In January, FIU fined five manufacturers and 21 retailers for currency manipulation to rein in market indiscipline.

FIU director-general Mr Oliver Chiperesa told The Sunday Mail that there is a high level of compliance that is contributing to market stability.

“We have noted that the parallel market rate and official rate are moving towards convergence. We expect the trend to continue. Once convergence or near-convergence is achieved, this will eliminate or reduce arbitrage opportunities and will result in improved compliance,” said Mr Chiperesa.

“Unscrupulous traders and businesses thrive on and profit by exploiting arbitrage in the rates, and we are happy that is reducing at the moment. At present, we are all awaiting the central bank’s Monetary Policy Statement for further policy direction.”

After presentation of the 2024 National Budget in November last year, some businesses resorted to forward pricing, among other malpractices that led to a wave of price increases.

FIU, however, stepped in to ensure discipline.

Businesses found on the wrong side of the law were penalised, with fines ranging from US$1 000 to US$20 000.

The Monetary Policy Statement is expected soon.