BY VENERANDA LANGA
RESERVE Bank of Zimbabwe Governor John Mangudya was on Thursday grilled in Parliament over disparities between the official United States dollar rates of 1:2,5 and the parallel market rate of 1:3,6 resulting in price increases of goods and services.
Mangudya appeared before Parliament to speak about fuel challenges in the country when he was asked to explain the impact on the economy of the non-availability of foreign currency in the country and the introduction of the real time gross settlement dollars.
In his recent Monetary Policy statement, Mangudya pegged the US exchange rate at 1:2,5, moving away from his initial position that the bond notes and US dollar were at par at a 1:1 ratio.
Uzumba MP Simbaneuta Mudarikwa (Zanu PF) asked Mangudya to explain whether the price of fuel would increase, if the exchange rate was to float at, for example, a rate of 1:3.
Dangamvura Chikanga MP Prosper Mutseyami also demanded to know how Mangudya was going to manage the parallel foreign exchange rates that were always soaring.
“The exchange rate of 1:2,5 is the starting rate and is not a fixed rate, and we think that parallel rates exist throughout the world,” Mangudya said.
“However, street rates should not determine where prices should be and we will ensure we control that.”
He said there was no money in the country for big companies to be able to purchase foreign currency at the parallel market rate of 1:3,6.
Mangudya said in terms of fuel, the bulk of the orders should be done through the formal inter-bank rates.
“What has been happening in the past few weeks is that buyers of foreign currency (have) not (had) enough cash to purchase foreign currency. We are not convinced that there are companies or firms that can purchase foreign currency at a rate of 1: 3,6 because there is no money in the country.
“The people that can afford to buy from the parallel market are only small traders, or people that want to pay for DStv, otherwise people have no money to buy from the black market. Some of the fuel dealers are not able to purchase it at the prices we have today because there is no money and because of the balance at their banks,” he said.