The Zimbabwean dollar has this week continued on a free-fall on the parallel market despite measures announced by monetary authorities last week to restrain it from further dipping.
Last week, the local currency shed 20 percent of its value in just three days to reach ZWL$ 40 against the American dollar (USD).
Yesterday, it opened the week on a same trajectory, at one point reaching ZWL$ 44, only to slightly retreat to ZWL$ 42 by midday today against the official interbank rate of ZWL$ 18.9.
Addressing press last week, Finance and Economic Development Minister, Professor Mthuli Ncube made assurances that they were tightening money supply to reduce the exchange rate from spiraling.
This included placing limits on daily bulk payer transactions on mobile money platforms which are yet to be announced.
The Minister also announced plans by the Central Bank to introduce a managed float exchange rate.
However economic analysts are skeptical of a managed float exchange rate as this will not be a true reflection of the market but of the Bank.
“The reason why these measures have not been effective is that the so called liberalization of the interbank market means that it’s still the RBZ who set the rate. So there is nothing new about it,” economic analyst Victor Bhoroma told 263Chat Business.
The interbank market has been literally stagnant in contrast to movements prevailing on the market.
This has seen most companies shun the interbank market and trading for foreign currency on a much lucrative parallel market.
“RBZ should just dump all the foreign currency they retain from various exporters on the interbank market at a favorable rate as a quick fix so that producers can also access it at a cheaper rate,” Bhoroma added.
However some analysts have alleged a conflict of interest on the RBZ’s part when it comes to its reluctance to entirely floating the exchange rate to market determinants.
They argue that the Central Bank is determined to pay less in local currency to exporters as long as a managed exchange rate on the interbank market exists.
Currently, RBZ retains between 35-50 percent depending of the sector, of exporters’ foreign earnings with the rest paid for in local currency at the prevailing interbank market.
