World

Parallel market fx rates within touching distance, says Mangudya

…as consumer basket remains flat

LIVINGSTONE MARUFU

The cost of living for a family of six rose marginally to ZWL$14, 438.23 by the end of August from ZWL$14 256.98 in July due to the effectiveness of the foreign currency auction system which arrested market volatility and speculative behaviour.

Sugar, cooking oil, onions, and meat and bath soap are among basic commodities whose prices have moved southwards in the last month and brought relief to customers who have become accustomed to price changes.

The official exchange is currently at US$1: ZWL$81.7 from US$1:ZWL$82.6 against black market rate which ranges between US$1:ZWL$90 and US$1:ZWL$100.

Reserve Bank of Zimbabwe governor John Mangudya told Business Times that the management of money supply was instrumental in arresting currency volatility.

“In the past two months, Zimbabwe has experienced price stability due to the fact that we dealt with twin factors which are exchange rate stability and the financial sector stability leading to the stabilising of basic goods across the country,” he said.

Mangudya said the forex rates on the parallel market are 10-15% higher than those on the official market “which means the rate is within touching distance and it’s going according to plan” after monetary authorities stamped its authority on mobile money operators “notorious for moving huge amounts which destabilised the market”.

Mobile money subscribers are allowed to transact ZWL$5,000 per day. Mangudya admitted that inflation was getting out of hand as retailers were employing forward pricing systems as they were not sure of the next price the following day to hedge against the erosion of value.

He said the government has designed a system which will see the gravitation of prices towards the centre which gives confidence to investors.

“After stability we start to expect growth as price stability will lead to the economic growth,” Mangudya said.

The Consumer Council of Zimbabwe told this publication that the recent increase in fuel prices could have a negative impact on food stuff prices.

It attributed the increase of the family basket to constant changes of parallel market rates, increase in fuel prices and limited supply of some products.

Zimbabwe is currently experiencing subdued production across all economic sectors including major forex drivers, gold and tobacco.

Despite the ravaging high cost of living, most local companies have failed to keep up with high inflation currently at 765.67% as of August.

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