Zimbabwe’s Finance Minister, Mthuli Ncube, expressed profound shock this week at the spiraling exchange rates on the parallel market, far surpassing the official figures. An investigative report by New Zimbabwe in Harare’s central business district revealed a staggering depreciation of the local currency against the US dollar, prompting high-level concerns and promises of stringent measures against illegal financial activities.
According to the report, while the official exchange rate stands at approximately ZiG13.36 to the US dollar, the street rate has escalated to ZiG16.00 for buying and a whopping ZiG20.00 for selling. This marks a depreciation of around 19.7% for buying and an alarming 49.7% for selling, based on the official rates recognized by financial authorities.
Persistent Disparities Trigger Harsh Responses
During a virtual press briefing from Washington D.C., where he is attending the International Monetary Fund’s (IMF) Spring Meetings, Ncube expressed his bafflement over the origins of these premiums. “I am not aware of such premiums in the parallel market,” he said. “Our fiscal policies have been very stringent; there haven’t been any liquidity injections that could justify such discrepancies.”
Alongside Ncube, the Finance Ministry’s Permanent Secretary, George Guvamatanga, also voiced his determination to address these challenges. Guvamatanga emphasized the robust capacity of banks to satisfy the foreign currency demands of local businesses and condemned any reliance on the shadow economy. “It must be clear that engaging in such parallel market transactions is a serious offense, and the government will enforce severe penalties on those found guilty,” he asserted.
Strategies to Stabilize the Currency
The government is preparing to launch a comprehensive crackdown on what it perceives as rampant speculative behavior that is contributing to the currency’s instability. “There is no substantial demand in the market that should drive up the rates to such extents,” Guvamatanga explained. He referred to the speculators and illegal dealers as part of a larger network of financial criminals, undermining the economic stability of Zimbabwe.
The officials are committed to restoring confidence in Zimbabwe’s currency by ensuring that all transactions comply with the law and by reinforcing the official channels for currency exchange.
Source: New Zimbabwe
