The head of Zimbabwe’s central bank denied on Thursday that it had fixed the exchange rate of the country’s new transitional currency, whose value it said it would let the market decide.
Zimbabwe ditched a discredited 1:1 dollar peg for its dollar-surrogate bond notes and electronic dollars on Feb 20, merging them into a transitional currency called the RTGS dollar.
The value of that currency, which authorities said they would float, has held unchanged at 2.5 to the U.S. dollar since Feb. 22.
The country’s economy has been crippled by a cash crunch and plans to allow ordinary Zimbabweans to exchange bond notes and electronic dollars for U.S. dollars at banks have yet to be implemented.
On the black market, the RTGS rate was 3.8 to the dollar on Thursday, compared to 3.5 last week.
Concerns that the government is resisting moves to allow a further devaluation of the RTGS dollar has discouraged those holding U.S. dollars from selling them at the prevailing rate.
“We have not fixed the exchange rate and we will not fix it,” Central Bank Governor John Mangudya told a parliamentary committee.
Ministry of finance secretary George Guvamatanga saw room for a further RTGS dollar devaluation, which he said the market would determine.
He told the committee that volumes traded on the black market were thin and that if rates on the forex interbank market rose too high, very few businesses could afford to buy dollars.
“We know between the two of us, where that exchange rate should be and where it should end but we will allow the market to get there,” Guvamatanga said.
John Robertson, a Harare-based economist, said the currency market was still being manipulated. “What they are trying to do is to ensure stability but market forces may decide otherwise,” he said.
The central bank has allowed mining companies and other exporters to sell their dollars on the interbank market, thereby seeking to create a pool of dollars to pay for vital imports such as drugs, electricity and fuel.
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Mangudya said Zimbabwe imported fuel worth $173 million in January and February through credit lines from foreign banks, which was enough to cover local demand during the period.
He said the fuel shortages that have been experienced since the start of the year were caused by some dealers failing to raise enough money to buy U.S. dollars for fuel imports and delays in supplies following payments.
On Tuesday, the government allowed mining companies and some other businesses to import their own fuel. Mangudya said supplies should normalize this month. Such promises have previously failed to end shortages.
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