National News

Govt moves to defend depreciating Zimdollar

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The government has exempted all domestic sales in foreign currency from the 15% surrender requirement and will promote the use of Zimbabwe dollar in payment of levies and fees, among a raft of measures to stabilise the local currency.

The measures come as the local unit has been depreciating sharply on the parallel market leading to a spike in prices. The dollar was trading above ZWL$2,500 on the parallel market against ZWL$1,200 on the auction system.

Businesses use the parallel market to obtain foreign currency as the foreign currency auction system has failed to meet its demand.

The new measures also come as the redollarisation of the economy is gathering momentum with 70% of transactions now in United States dollar.

Announcing the measures, Finance and Economic Development minister Mthuli Ncube said the economy has seen a resurgence of macroeconomic instability with domestic inflation being driven primarily by skewed preference for the dollar as a savings currency.

“This phenomemon has seen growing US$ cash economy and it is estimated that a large portion of domestic transactions are now being conducted in foreign currency,” Ncube said.

He said all external loans to the government would be transferred to Treasury from the central bank while the auction will be further” fine-tuned” and will now auction a “pre-announced envelope on a pure Dutch auction basis”.

Ncube said all basic goods will no longer be subjected to import licences.

Analysts say the measures came late when the redollarisation juggernaut is in full steam.

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