Cheap talk and runaway prices
The Reserve Bank of Zimbabwe governor, Dr John Mushayavanhu, recently claimed that the introduction of the local currency, the Zimbabwe Gold (ZiG) will result in price and exchange rate stability.
However, the main issue is that this is just cheap talk by Dr Mushayavanhu as in reality, prices of goods and services are going through the roof, and inflation is rising, causing anxiety in the market.
This indicates that the central bank’s policies aren’t making a difference because the local currency is losing value in relation to the US dollar and other major currencies.
Zimbabwe’s exchange rate yesterday stood at around ZWG 13.81: US$1 from ZWG 13.70 in June.
On the parallel market, it is currently trading at ZWG28: US$1 from ZWG18:US$1 in June.
This indicates that in order to address the numerous problems arising from the currency dilemma, the Reserve Bank of Zimbabwe must devise new policies.
