Finance minister Mthuli Ncube moved to calm the markets this week, saying the value of the bond note and the Real Time Gross Settlement (RTGS) is still at par with the United States dollar.
His comments came at a time forex dealers on the streets were paying $400 for every US$100 or a rate of $1:4 on Wednesday against the central bank’s $1:1 and investors piled into equities on the local stock exchange.
Zimbabwe, which adopted a multi-currency system in 2009 after a runaway inflation, will now maintain the currency system until specific ‘fundamentals’ are achieved, he said.
But analysts say his assurances to the market will do very little to help inspire confidence.
In his presentation, Ncube had set the tone for a free market approach on foreign currency allocation and procurement and hinted those requiring foreign exchange needed not bother the central bank anymore, an announcement that shattered market confidence.
Informed by what many read as a policy shift on forex sourcing and the devaluation of the local unit, individuals and companies that rely on imports for raw materials and those seeking to preserve value decided to buy the US unit.
As demand for the US dollar increased, many started paying above market rates to get the currency, triggering a wave of price increases in the economy, a scenario Ncube had not envisaged.
“In view of the need for an orderly currency reform programme that will be followed when the economic fundamentals are right, the country shall continue to use the multi-currency system,” Ncube said in statement.
“This system entails that foreign exchange earners are not prejudiced of their regulatory foreign exchange receipts and that those who do not earn foreign exchange have access to foreign exchange through the banking system as per the current policy of foreign exchange management system. In parallel, the Reserve Bank shall continue to maintain adequate resources for the import of essential commodities.”
He added Treasury would guarantee private deposits are legally protected, saying neither the Reserve Bank nor government could have access to them. — Staff Writer.