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Shops ignore official exchange rate

by Staff reporter
26 Jun 2020 at 07:33hrs | Views
RETAIL shops in Bulawayo yesterday continued trading using the parallel market exchange rate of US$1:$90, ignoring the new US$1:$57 rate announced by the central bank on Tuesday after the first day of the foreign currency auction system.

The US$1:$57 exchange rate was meant to replace the fixed US$1:$25 introduced in March.

The new auction system is seen as an attempt to tame the parallel market where the rate has lately hit the US$1:$100 mark.

Service providers and retail shops were also chasing the parallel market, a situation which has caused a spike in prices of basics, with inflation also wreaking havoc.

Contacted for comment on the market disparities, National Consumer Rights Association co-ordinator Effie Ncube said: "We are the only country on earth where you find different exchange rates for different cities and rural areas. In Zimbabwe, because you have around 70 districts, you have around 70 different exchange rates for different currencies. That is a first for any country on earth.

"The currency instability manifested by different exchange rates has a huge impact on the consumer, and the erosion of value in the Zimbabwe dollar that is continuing unabated is eating into the pockets of consumers and destroying the very little of the disposable incomes they had. What it means is that this is a huge vote of no-confidence in the Zimbabwean economy, in the Zimbabwean government and in the ability of both political and economic authorities to deal with the political and economic crisis pandemic as I call it."

Nurses have downed tools demanding payment of their salaries in US dollars, with junior doctors threatening to follow suit.

Teachers have warned that they will not be returning to classes when schools re-open next month until their demands for US dollar salaries are met.

Government is pleading bankruptcy, and recently awarded civil servants a US$75 cushioning allowance on top of a 50% salary increase, an offer they rejected.

Private sector employees are also pushing for US dollar payments as inflation erodes the buying power of their locally-denominated salaries.

"We have a serious crisis in the country that is not going to be solved by the RBZ [Reserve Bank of Zimbabwe] currency auction system," Ncube said.

"What they need to do is find ways of pumping confidence, political and consumer confidence to the Zimbabwean dollar, or suspend its use because there is a serious lack of confidence in what is being done by the government."

Source - newsday