RYAN CHIGOCHE
Finance and Economic Development minister Mthuli Ncube has said the multi-currency regime is here to stay despite calls for the redollarisation of the economy due to the weakening of the local currency.
The local currency has been depreciating against the greenback amid high demand for the dollar which is seen as a store of wealth. The dollar is trading at between ZWL$600 and ZWL$650 on the parallel market and ZWL$352.0626 on the foreign currency auction system.
“Government has clearly stated its intention of maintaining a multi-currency system based on dual use of the US dollar and the Zimbabwe dollar. However, the market lacks confidence that the Multi Currency system is here to stay for the foreseeable future. To eliminate speculation and arbitrage based on this issue, the Government has decided to embed the multi-currency system and the continued use of the US dollar into law for a period of 5 years,” Ncube said.
He said the interbank market exchange rate is now being determined by banks on a willing buyer-willing seller basis and the utilisation in all economic transactions of this formal rate is now made mandatory by law.
“While economic agents are free to price their goods in US dollar or Zimbabwe dollar, and there are no price controls, the equivalence of US dollar prices and Zimbabwe dollar prices for a commodity should be strictly based on the current interbank exchange rate as determined by the Willing Buyer Willing Seller rate,” Ncube said.
“No discounting of prices for payments made in US dollars shall be allowed and the law provides for strict criminal and civil penalties including US dollar-based fines, suspension or cancellation of business/trading licences for offenders, amongst other penalties.”
