BY FIDELITY MHLANGA
The Reserve Bank of Zimbabwe (RBZ) says the country’s forex situation will improve as the year progresses on the back of increased confidence and growing exports.
RBZ deputy director for economic research division, Nebson Mupunga, yesterday told delegates at the retailers’ indaba that the bank was committed to the liquidity of the interbank market.
“As RBZ we see the forex situation improving with exports and foreign earnings. We hope that foreign currency in the interbank will improve as confidence creeps and exports grow. Last year we did well with exports netting $5 billion, so we hope this year will be better,”Mupunga said.
“The bank is committed to the efficient and orderly management of the interbank foreign exchange market and will intervene only in case of market failures and other malpractices that may harm price and financial stability.”
Mupunga decried arbitrage, rent seeking and speculative behaviour prevailing on the market.
“You are killing the economy, you are putting pressure on the foreign currency; you find that it becomes a self-inflicting system bench-marking prices in US dollars and putting a premium far above the rate of the black market rate,” he said
Confederation of Zimbabwe Retailers president Denford Mutashu bemoaned the failure by the interbank market to quench the huge forex demand by traders.
“There are more buyers than sellers. A lot of players are trooping to the interbank, but it’s not working, forcing retailers to go back to the alternative markets where rates are high. This has exposed consumers because premiums are high,” Mutashu said.
He added that the retail sector’s performance for the first quarter of 2019 was characterised by falling capacity utilisation, constrained demand due to low disposable incomes.
“It is increasingly becoming more and more difficult to operate retail businesses in the wake of price instability, supply constraints, continued wage demands and rising costs against declining revenue as demand is constrained. The threat of price controls only works to decimate the remaining confidence in the economy. Government should not use threats, but engage sectors while critically examining value chain challenges with a view to craft long-term economic strategies,” Mutashu said.
Speaking at the same event, Confederation of Zimbabwe Industries president Sifelani Jabangwe said there was need to improve policies and foreign currency inflows, adding that a lot of players felt that the interbank exchange rate was too low.
“For the exchange rate to move upwards at a time we are having a tobacco season does not make sense. What justifies the movement of the rate? Business is concerned with the movement of prices, we fear that we may be suffering because of lack of working capital,” he said.
Industry deputy minister Raj Modi said government will work to ensure that the pricing regime is competitive.
“I hope that the industry players in all sectors of the economy will work closely with the commission in their work. My ministry is also looking at how the National Competitiveness Commission can, together with suppliers, wholesalers and retailers, engage to come up with best practices on pertinent issues of pricing standards and service delivery,” Modi said.