Finance minister reassures market

FINANCE minister, Mthuli Ncube has said government has no control over the parallel market rates of the US dollar, which yesterday soared to about 400% after tumbling last Friday from 600% to less than 200%, triggering a new wave of price hikes.

BY XOLISANI NCUBE/EVERSON MUSHAVA

Addressing journalists after a Cabinet meeting last night, Ncube insisted the real time gross settlement (RTGS) and bond notes were still at par with the US$, officially at least.

“Our market rate is 1:1 convertibility to the US$, both for RTGS balances and bond notes. That is the official exchange rate. So really, we cannot be commenting about movements in the parallel markets to influence our policy,” he said.

Ncube said government had secured a $500 million Afreximbank facility to back the RTGS balances and pleaded with ordinary Zimbabweans not to trade on the parallel market.
“However, having said that, what we can say is that people should desist from being involved in the parallel market, both in terms of currency activities and activities on the goods market,” he said.

The briefings have become the norm each week after Cabinet meetings. Yesterday’s briefing was attended by Energy minister Joram Gumbo, Industry minister Nqobizitha Mangaliso Ndlovu, Health minister Obadiah Moyo and Information minister Monica Mutsvangwa.

Mutsvangwa said government has released money for importation of basic goods. She pleaded with retailers to sell their goods at prices reflecting the official exchange rate.

“Cabinet resolved that manufacturers and suppliers of basic commodities, medical drugs and services should revert back to prices that recognise the guaranteed convertibility of bond notes and RTGS balances to the US dollar on a 1:1 ratio,” Mutsvangwa said.

Ndlovu said already manufacturers were delivering commodities such as cooking oil and other basic food stuffs.

But government’s assurances have so far failed to douse the fears on the market.

The US$ was trading at 250% against RTGS in the morning, but shot to about 400% by day end while trading at 20% less for bond notes.

Prices of commodities in most retail outlets remained high, with most of them three times higher than they were before introduction of the a 2% tax on all electronic transactions..

However, the US dollar rate plummeted last Friday after news that Ncube had secured backing of the RTGS accounts from Afreximbank at a rate of 1:1, throwing most money dealers into losses after purchasing the greenback at as high as 600% at midday.

That same day, government gazetted the 2 cents for every dollar transaction tax that economists warned would trigger price hikes. From Saturday, the US dollar rate made slow strides in picking up before galloping again yesterday, a move that is likely to trigger more uncertainty in the market.

Some shops visited by NewsDay yesterday, especially pharmaceutical companies, were still demanding payment in US$ while others had a three tier pricing system which saw the prices in RTGS four times higher than that of the greenback.

In some shops, especially those selling hardware; even the prices pegged in US$ were rising sharply.

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23 Comments

  1. It is becoming impossible to do business as most suppliers require payment in USD $ and the customer’s the workforce do not have $USD prices are out of control and there seems to be no immediate solution…Guys scrap the chase for USD and divert to rand…as a short term recovery stability plan …it will work…there are too many gangster’s in the market chasing USD$ and they have monopolized the dollar chase …to get rid of these thugs take away what they are looking for…how many Chinese…Nigerian..Asian…nationals own these small “fronts” its like Ex President Karma said be careful who you are “open to business” to…In reality wages are still pegged at RTGS or bond rate so its like Zimbabwe is open to business for foreigner’s …to take the USD out …with free labour cause workers get nothing…NO. Mr NCUBE we respect your ideas but short term immediate remedial action is required now…

    1. If Banks accept your US$ deposit but will not pay back in US$ then you will be a fool to keep depositing US$.

      If you need US$ the only source is the street dealer, no doubt many of them get the US$ from the Bank, selling it at the unofficial rate. If you then go and deposit your US$ at the Bank then it is your fault!

  2. Ummmm,a government that operates by pleading instead of addressing gigantic elephants in its house cannot be trusted to ameliorate the current economic challenges

  3. Eli Drake Dummy

    Unless we start exporting more than we import this situation will continue unabated. Short term measures might include ridding ourselves of ‘front’ shops such as those operated by certain Olgas from West Africa and certain foreigners from lands in proximity to the Indian Ocean. I would be sceptical about starting anything with the Chinese though. Love it or hate it the Chinese government has done a lot for us as a country and Continent as a whole as opposed to the Indian or Pakistani governments.

  4. tendai chaminuka

    Imagine if Ncube was an army general directing a battle.He would not mind losing millions of gallant fighters all in the name of victory is certain mantra though the chances of that victory will be very slim.The Hitler type.

    1. stalin in world war 2

  5. Hardware shops and pharmacies are selling their goods in US$ hard currency. There is no where you can get the US$. This is now creating a gap for parallel market people to sell their US$ AND HENCE INCREASING THE DEMAND FOR THE HARD CURRENCY
    These suppliers do not have the source of forex. A situation whereby either the supplier or the buyers source the hard currency. It is becoming a vicious 22 circle.

  6. Meanwhile, Edgars Stores Zimbabwe have joined the price bandwagon and imposed a 2.5% on accounts which were previously tax free. Is this not illegal?

  7. Industry is slowly but surely going back to the USD and rejecting the bond/rtgs. The government needs to accept this, regularise it, and tax them in USD. Goods like cement are now being openly traded in USD, yet ZIMRA still collects in rtgs. Who is benefitting? Govt. should allow such companies to collect USD through their FCA aacounts, especially for their diaspora customers, and collect USD revenue. The same can be done for fuel, where there can be USD fuel stations to cater for the NGO’s and diplomats. Slowly the government will start building up forex and hopefully, the forex under the pillows will also start coming out. The current unregulated situation is causing a lot of profiteering in both the USD and rtgs prices.

  8. tsvaga chikonzero chaita musoro uteme

  9. We are doomed!!!!!

  10. kkkkk tin tin, ugogadzirisa chikonzero chaita kuti msoro ubande, so simple nt taxing the down trodden

  11. Comment…those advocated for the us dollars only are idiot where does that us dollars come from becoz we don’t print it and it hard currency every one is chasing after it. Let us have our own currency which is easy to find than using other ppl money bullshit

  12. Joram, what have you got to say now after this plea to consumers!!?

  13. THE BLACK MARKET RATE WILL ONLY TUMBLE THE DAY WE WILL START DRAWING USD FROM BANKS AND FOR AS LONG AS BANKS CANNOT PAY FOR OUR DSTV ,BFOWARD PURCHASES AND SO FORTH THEN NO MAN ON THIS EARTH CAN TELLS US TO ABANDON TRADING ON THE BLACK MARKET EVEN IF THEY PRY ON THE ACCOUNTS OF THOSE DEALING IN FOREX TACTICS WILL CHANGE IN TWO MINUTES AND TRADING WILL BE DONE ON OTHER MEANS

  14. So what is your solution Mr Ncube.IT seems you have been swept away by the gigantic waves of the situation and now you are nowhere.YOU are the captain of this ship so you need to sail on.

  15. This Mthuli guy has turned out to be a real lemon. At this rate he makes Chinamasa look like a genius.

  16. Mthuli i thought your were the genius one! You can never plead with the ordinary Zimbabweans not to trade in the parallel market as long as the banks do not avail the USD. Where will they get the USD from then, this is simple mathematics, they will obvioulsy turn to the next available thing, which is the parallel market, duhh!!!

  17. When did lecturers understand real tough economics. Haasi mabhuku aya ekudherera van vechikoro. wawa wawa kuwawata

  18. What is the point of government insisting the trader and the ordinary people must use the official 1:1 exchange rate from US$ to Bond Notes when the Banks will not pay these people in US$ but Bond Notes. People cannot pay for their imports using Bond Notes and the only other source of US$ is from street dealers.

    As things stand, there will be very few people who be depositing their US$ at the Bank and very few people would want to be paid in Bond Notes – certainly not at the official exchange rate. This is just chaos and the ordinary people, at the coal face, are the ones who are suffering the most!

    Whatever government has borrowed to pay for the imports, it will be back to borrow some more as long as Zimbabwe continue to import more than it exports – one does not need a degree in anything to see that!

  19. Are shops going to change the prices everyday according to the market rates.if we are going to get stability poor people can not afford food let alone medicines in united states dollars what are the government going to do in order to be fair to the lesser income people. An finally what about school fees are parents going to pay in united states dollars zimbabwecurrency or bond as people have resorted to charge what there feel fit please address all the confusion

  20. These buying guys all talk of the buyer the one who deposits thousands of dollars everyday and tells them the rate to buy at .this buyer never gets caught coz thats the very guy who runs the system coz by these transfers wouldve been traced . so until gorv has no need to buy us$ the rate wil go into thousands and frankly they dont care as long they get enuf to keep their larvish lives on top the madness will go on

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