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Mthuli Ncube won't adopt the black market rate

by Staff reporter
28 Aug 2021 at 05:48hrs | Views
FINANCE Minister Mthuli Ncube says the government will not be forced into following the parallel market foreign currency rate.

He was responding to MPs during a question and answer session Wednesday on the continuing rise of the US dollar against the Zimbabwe currency.

However, the government insists the exchange rate has been stabilised due to the introduction of the Reserve Bank of Zimbabwe (RBZ) auction rate system introduced in 2020.

However, Zanu-PF MP Joshua Murire told Ncube that whilst the formal exchange rate had stabilised, the black market rates continued on the upward trend thereby determining the prices of goods and services.

"What is the ministry's policy on stabilising the prices that are being pegged using the black market rate?" asked Murire.

In response, Ncube said: "We will not follow the parallel rate.  We want to be clear about that because it is a rate that is driven by the minority of economic players. The majority of the economic players are receiving money from the auction," said Ncube.

The minister warned businesses fuelling the parallel rate that risked arrest.

He added several companies had received more than US$400 million from government re-equipping purposes.

"I am just targeting one area that is retooling. Secondly, anyone is free to express whatever exchange rate they wish to purchase the United States dollars at.  So those who feel that they ought to be buying the United States dollar at higher prices, are free to express that wish through the Dutch auction.

"Why do they not go ahead and do that?  Why should the whole market then be forced to shift towards power rate, shadowy people that we do not understand?"

Dzivaresekwa MDC Alliance MP Edwin Mushoriwa said the black market rates were hovering around US$1 to 166 thereabout whereas the auction rate is running at around US$1: 85.

"Given such huge differences, is it not possible that the foreign auction system is actually fuelling the rise of the rate on the parallel market because the people that are getting the money at the auction-rate are actually doing arbitrage and making sure that they take this money?" said Mushoriwa.

According to Ncube, the government was aware of some of the culprits involved in fuelling the black market.

"We know some of them but not all of them. Those that we know, we have taken action, we have arrested them and we have instituted penalties on that type of behaviour.

"We will be very happy to receive those tips and then follow up on those individuals and companies who are violating the law so that there is full compliance.  We need order and discipline.

"We have just received almost a billion US dollars which should go a long way in bolstering our foreign reserves and that money is already in our reserves and accounted for as such,"

Ncube added: "There was no justification whatsoever for the exchange rate to keep weakening. It should be going the other way."
Source - newzimbabwe