……As economy implodes
Government is set to introduce new “innovation” on mobile money as it tightens regulation to save the local currency which has weakened thereby pushing up prices, Finance minister Mthuli Ncube has said.
The Zimbabwe dollar has plummeted in value on the parallel market. For one to buy US$1 on the parallel market, one requires ZWL$180 from ZWL$130 two weeks ago, squeezing hard-pressed Zimbabweans.
At the auction system, the Zimbabwe dollar has been losing value every week so far.
This week, the Zimbabwe dollar lost value to trade at ZWL$88.55: US$1 from ZWL$85 two weeks ago.
Prices of goods and services are spiralling out of control amid fears the situation could worsen after ZERA increased fuel prices yesterday.
Ncube said the government was tightening regulations to ensure currency stability.
Since last week, the government intensified its crackdown on currency manipulation.
“Stability is our focus, and we are watching it like a hawk,” Ncube said.
“There will be innovations that you will see especially on the mobile money platforms which have tended to run ahead of regulation. We can catch up with them and institute effective regulation.
“It’s about tightening the regulation, making sure that it complements the other policy measures so that we stabilise our currency and keep it stable.”
Zimbabwe’s inflation, which had consistently declined from 837% year-on-year in July last year, to 50.24% in August, shot up to 51.55% in September as prices of goods continued to rise beyond the reach of most citizens.
On a month-on-month basis, inflation jumped to 4.73% in September from 4.18% in August.
The instability forced the Reserve Bank of Zimbabwe governor, John Mangudya to revise his annual inflation targets.
Early this year, Mangudya projected the inflation rate to be in its teens at the end of the year.
Mangudya is now projecting inflation to end the year at between 35% and 53%, up from a target of between 25% and 35%.
Initially, the monetary chief and Ncube had projected annual inflation to end the year at around 10%.
Ncube is, however, bullish.
“Inflation has been falling fast from as high as 837% in July 2020 to 51.55 in September. By the year-end we expect it to fall further. We are more bullish. That’s a major deflationary drive in the past two years,” Ncube said.
He added: “The issue is really keeping that stability which we have been going through. We continue to register current account surpluses two years in a row, which shows that the currency introduction has worked.
But, we have to keep it stable. That’s the most important thing.
“The gap between the official rate and the parallel market is not too wide but within the global norm. It used to be as high as 300%. But, now 30% or so lower than that. I am pretty confident that we are within the convergence zone.