“Zimbabwe has none of those and what we are going to see is the exchange rate shooting up, thereby resulting in an increase in the prices of basic goods and services.“Honesty, when market forces are at work, the Zimbabwe dollar is likely to drop to 500 against the rand and other currencies because what the interbank rate has been doing is to over value the local currency,” Ncube warned.“So far the government has not indicated where we are going to start off with the exchange rate.“If the Zimbabwe dollar starts weak, then things are likely to go bad for us as it will never gain against other currencies.
“This is because we do not have enabling factors such as production … to grow the economy or a currency that can become strong,” veteran economist John Robertson weighed in.
“The move by Mthuli Ncube is an ill thought one. We are currently facing shortages of foreign currency and we have no productivity in Zimbabwe to support economic growth and the local dollar.“Floating the Zimbabwe dollar will result in the exchange rate shooting up, triggering hyperinflation and price increases.“What Mthuli has done will result in a serious devaluation of salaries. For example today people who are earning $7 000 with the current parallel market rate of 1:40 are earning around US$200.“In just a few weeks the parallel rate will hit 1:100 and that is when it will be clear that Mthuli has failed,”Biti told the Daily News.