SENIOR STAFF WRITER
THE prices of basic consumer goods should start to come down in the coming months following the recent introduction of the foreign currency auction system and other measures aimed at stabilising the country’s economy, the governor of the Reserve Bank of Zimbabwe (RBZ) John Mangudya, pictured, has said.
“We do believe as a bank (RBZ) that we have reached a plateau in terms of price instability and in terms of exchange rate instability and, therefore, what the budget does, is to further reinforce those positions.“The combination of a tight fiscal regime, together with a tight money supply and … the auction system of foreign currency, have seen these … measures being pursued by the government to ensure that the country does not go through a process of hyper-inflation.“We are quite happy with what the minister of Finance presented on Thursday,” the update Mangudya told participants in the virtual Daily News meeting.
“We are happy with where we are. We think we are on course to achieve price stability. We are also on course to achieve foreign currency exchange rate stability.“The … market rate of exchange measured by the auction is now narrow, which is what we always expected as we said last time we cannot eliminate the parallel market, but it is about the gap that is between the two,” Mangudya said further.“You find that the parallel market exchange rate is between $75 and $90, whilst the market rate of exchange is $68,88. That is telling you they are narrowing.“The way forward is the sustainability of the auction. How do we sustain it to ensure that we keep on putting resources into the auction system?” he added.
“Business must price their products according to market rate. We are in are in control of money supply.
“We urge the business community to ensure that they also use the market rate of exchange to price their products.
“Some have complied, others are still lagging behind. I prefer self-compliance to forced compliance,” Mangudya said.
“In terms of these statistics, it tells you that the money supply in this economy is not significant enough to push the rate,” Mangudya added.
“After four auctions, we expect the retail sector to respond by applying the auction rate in their pricing mechanism.
“We are concerned with players who are coming to the auction system, but continue to use other exchange rates in their pricing.
“Other concerns we want to raise with the retail sector are that we continue to see other products rise in US dollars. There is no justification for that,” Guvamatanga warned.