Tills ring as consumers seek higher exchange rate

LIVINGSTONE MARUFU

Zimbabwe retailers are now recording high sales volumes in United States dollars as consumers are getting a better exchange rate than the parallel market.

In the past few months consumers were not willing to spend their hard currency in the shops due to low official exchange.

But, the tide has turned as consumers flock to the retail shops with their hard currency as the official exchange rate has surpassed the parallel market rate.

The official exchange rate is ZWL$614.6: US$1  while in the parallel market  the Zimbabwe dollar is trading at  ZWL$600 :US$1 if one is selling.

In a survey carried out by Business Times, several retailers are using a  rate of between  ZWL$674:US$1.

“Given the current stability of the exchange rate, the official exchange rate is nearing convergence with the parallel market as we are allowed a 10% premium on top of the official exchange rate hence more customers now prefer using hard currency to avoid hefty charges incurred when using the local currency,” Confederation of Zimbabwe Retailers president Denford Mutashu said.

He said it was “encouraging” that retailers are now earning US$ from their sales and that has helped to sustain operations in the past month or so.

It is understood that formal retailers have the advantage that it is taking both local currency and US$ which is way better than informal traders who solely use US$.

“We are getting huge amounts of US$ sales these  days due to near convergence of the two exchange rates as more  people now use hard currency to buy goods in shops and this has left more money changers on the brink,” Mutashu said.

The Reserve Bank of Zimbabwe  has been struggling to release the forex allotted to companies, resulting in a backlog of more than US$100m.

However, the central bank governor John Mangudya, said the backlog will be cleared sooner rather than later.

The backlog has left many companies without working capital to sustain the operations.

Two months ago,  retailers were on the edge amid revelations that manufacturers cut supplies of basic commodities to those paying in local currency.

Manufacturers were favouring tuck shops that pay in hard currency.

But the situation has  changed during the past month as manufacturers started giving any player who wants to stock.

“Prior to exchange rate stability, we were facing  some problems from manufacturers but with the stable exchange rate  whether one has ZWL$ or the US$, one can access his or her goods without complications,” Mutashu said.

“At this juncture, a retailer can have a limited amount to buy whatever  he wants but there have been no problems with the suppliers ever since we started experiencing exchange rate stability.”