HARARE – Finance and Economic Development Minister Professor Mthuli Ncube says he expects the official exchange rate to converge with the parallel market rate soon as the government continues to implement prudent fiscal measures that do not fuel the black market.
In February, the Reserve Bank of Zimbabwe (RBZ) floated the local currency, dubbed RTGS dollar, at 2.5 to one US dollar after abandoning the 1:1 fixed rate.
The rate has steadily gone up to slightly above three RTGS dollars per US dollar while on the black market the rate is between 4.1 and 4.3.
Prof Ncube said government was maintaining a tight fiscal regime in order to contain the parallel market.
“Its early days, we just introduced the new currency regime a little over a month ago, so it (the new currency)is trying to find its way, it is trying to find equilibrium; it will get there and close that gap between the parallel market and the official floating market,” he told Bloomberg TV in Washington, the United States.
“The (black market) cannot carry on, you know why, because on the fiscal front things are very tight, because previously the fiscus was a source of money growth and therefore (creating) weaknesses on the currency and currency volatility.
“Currently things are very tight, we are running a surplus for the last four months in terms of primary deficit so we do not expect the currency to come under pressure, neither is money supply growing. On the contrary, expect month to month inflation to go negative in the next few months so the currency (rate) cannot run away too far.”
Prof Ncube said foreign currency supply was expected to increase as the tobacco marketing season progressed.
“We are looking forward to an improved tobacco season, we earn about a billion dollars from the sale of tobacco globally so we expect that to stabilise the market over the next few months,” he said.
Last week, the RBZ issued 26 bureaux de change licenses to different firms, with over 100 branches across the country, as part of efforts to formalise currency trading in the country and kill the parallel market.
It is hoped the bureaux de change will channel more foreign currency into the formal system, to be availed for use by productive sectors of the economy.
The central bank also hopes that the bureaux de change would be the vehicle through which the public would buy and sell foreign currency while commercial banks cater for commercial clients. –New Ziana