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Zimbabwe retailers index prices in USD

by Staff reporte
31 Oct 2023 at 05:37hrs | Views
The foreign currency exchange rate system implemented by the Reserve Bank of Zimbabwe (RBZ) mandates that prices must be displayed in both local currency and foreign currency. Retailers are required to have boards displaying the exchange rate used in each store for the benefit of customers. Failure to comply with this regulation is considered an offense under Statutory Instrument 185 of 2020.

President Mnangagwa introduced Statutory Instrument 185 of 2020, known as the Exchange Control (Exclusive Use of Zimbabwe Dollar for Domestic Transactions) (Amendment) Regulations, 2020 (No.3). This amendment modified the original legislation, which mandated the sole use of the local currency. It now requires that all goods and services be priced in both the Zimbabwean dollar and foreign currency, based on the prevailing exchange rate.

Recent developments in the retail sector involve many businesses indexing their prices exclusively in United States dollars (USD) due to the volatility of the local currency's exchange rates, which change frequently. However, customers are still given the option to pay in local currency.

The extension of the multi-currency system to December 2030, as outlined in Statutory Instrument 218 of 2023, has received widespread support from economists and business leaders. This extension has eased concerns for businesses and potential investors regarding the currency debate. It provides financial institutions with confidence to offer long-term loans, which are vital for business growth.

Retailers and local authorities, including the Bulawayo City Council, are adapting to this new multi-currency system by indexing their prices in foreign currency. Residents have the flexibility to settle their bills using the currency of their choice, based on the prevailing exchange rate.

The Confederation of Zimbabwe Retailers (CZR) President, Mr. Denford Mutashu, explained that these measures are aimed at entrenching the use of the local currency. He praised the government's decision to extend the multi-currency system tenure until 2030, as it inspires confidence in the market.

CZR believes that by working closely with the government, policy frameworks can be adjusted for the betterment of businesses and the overall economy. Mr. Mutashu emphasized that the Zimbabwean dollar is a legal tender and should be accepted by retailers.

Economists argue that using the local currency promotes competitiveness both regionally and globally. They believe the extension of the multi-currency regime until 2030 will allow the government to develop proper policy frameworks for a gradual transition from the multi-currency system to the use of the Zimbabwean dollar exclusively.

Source - The Chronicle