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Zim dollar plunges

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The local currency yesterday plunged to between ZWL$13 000 and ZWL$15 000 per dollar, its lowest level since roughly ZWL$8000:US$1 two weeks ago, despite government efforts to boost it,Business Times can report.

Since businesses utilize the parallel market rate to price their products, this week’s sharp decline in the value of the Zimbabwe dollar on the parallel market prompted prices of raw materials and commodities to soar.

The Zimbabwe dollar dropped from roughly ZWL$5 900 two weeks ago to ZWL$8 600:US$1 yesterday on the official market.

The Zimbabwean dollar was trading for ZWL $681:US$1 on the official market and ZWL $800:US$1 on the black market in January of last year.

Due to the local currency’s volatility, many observers claim that the economy as a whole is currently being impacted, since prices have risen to levels that are out of reach for many.

According to Philmon Chereni, head of corporate affairs at the Consumer Council of Zimbabwe (CCZ), the monthly basket of low-income urban earners for a family of six grew by 22.66% in local currency, from ZWL$2 950 460.70 to ZWL$3 628 944.20.

“Among the top shakers in the basket were cabbage, salt, tomatoes, onions and cooking oil which rose by 97,7% , 63.7%, 56, 4%, 50, 6% and 44, 8% respectively. This is partly attributed to the high demand during the past festive season,”Chereni said.

However, the outgoing governor of the Reserve Bank of Zimbabwe said the country’s macroeconomic fundamentals have remained strong to support and sustain the current price and exchange rate stability as attested by the continued favourable balance of payments, low growth in money supply, and a safe and sound banking sector.

“The central bank remains confident that the continued sale of gold coins and gold-backed digital tokens will sustainably take away steam from the store-of-value demand for local currency during the short to medium term, with positive spinoffs on the substance of obtaining price and exchange rate stability. Furthermore, the central bank’s strategic resolve for continued monetary prudence will add further impetus to the positive prospects of the local currency over the medium term. In addition, the ongoing monitoring and surveillance by the Financial Intelligence Unit will effectively minimise incidences of exchange rate manipulation and abnormal pricing practices,” Mangudya said.

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