Reserve Bank of Zimbabwe (RBZ) Governor John Mushayavanhu has assured that the recent surge in prices at formal retail outlets is expected to ease, following the implementation of monetary measures designed to stabilize the local currency, the Zimbabwean dollar (ZiG).
In an interview with The Sunday Mail, Mushayavanhu stated that the foreign exchange market had shown signs of stabilizing over the past two weeks. He noted improvements in the parallel market exchange rate, attributing this to the RBZ’s interventions aimed at curbing the currency’s depreciation.
The RBZ recently adjusted the official exchange rate to ZiG24 per US dollar, down from approximately ZiG14 per US dollar, as a response to the local currency’s decline on the parallel market. According to Mushayavanhu:
“With the exchange rate showing signs of stability, price increases have noticeably slowed down. Many retailers had set their prices using higher exchange rates, expecting further depreciation of the currency.
As stability continues, we anticipate a drop in prices in the coming weeks.”
To address foreign currency shortages, the central bank injected US$110 million into the market between July and September, with an additional US$50 million following the latest policy adjustments.
Mushayavanhu expressed optimism that foreign currency supply would improve in the near term, although he acknowledged that such changes often take time to affect the market.
Despite increases in regulated prices, such as electricity tariffs, the central bank expects the parallel market exchange rate to appreciate soon, driven by a 13.4% rise in foreign currency inflows in the first eight months of 2024 compared to the same period last year.
Mushayavanhu also emphasized the role of the Financial Intelligence Unit (FIU) in monitoring businesses that either refuse to transact in ZiG or use black-market exchange rates. He reported that compliance had improved in the formal sector, though efforts were ongoing to enforce compliance in the informal sector.
Since the central bank’s devaluation of the ZiG from ZiG14.1 to ZiG24.3 per US dollar, the currency has continued to lose ground, trading at an average rate of ZiG25.8 per US dollar as of October 8.
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