Thursday , May 6 2021

RTGS Mthuli Ncube under siege



Local currency ZIMBABWE, the RTGS dollar, has lost more than 20 percent of its value since its introduction, as the availability of foreign currency on the formal market is still weak.

Until Friday of last week, the RTGS dollar weakened to RTGS $ 3,0120 against the US dollar, down 20 percent.

Analysts attribute the continued decline of domestic currency to limited availability of foreign currency on the formal market, and exporters expect to continue to weaken.

"There is a feeling in the market that a formal market rate is managed by the central bank, so exporters are reluctant to sell, but now that the rate is getting worse, we expect the market to be current," said Walter Mandey of Trigrams Investment.

At the end of February, Zimbabwe introduced a new currency called RTGS, or a real-time gross dollar bill, in the process of abandoning its long-standing 1: 1 parity between the US dollar and the local transaction instrument bond.

The introduction of a new currency was accompanied by the introduction of a market-based foreign exchange market, where the value of domestic currencies in relation to other global currencies was determined by market forces through the so-called interbank market.

At the beginning, the Zimbabwean reserve bank put an official RTGS rate of $ 2.5 USD: $ 1. This has since devalued to the present level.

The official exchange rate, however, is 40 percent lower than the one prevailing in the parallel market, where the RTGS dollar trades 4.2 times in relation to the dollar.

Zimbabwe's attempt to mitigate the shortage of dollars and halt its crash on the black market is showing little sign of work.

According to marketwatch.co.zw, a website led by analysts in Harare, RTGS $ has fallen to the lowest level for more than five months.

The government of President Emmerson Mnangagwe is fighting the worst economic crisis in the country over the last ten years, with the shortage of foreign currency causing food and fuel shortages and rising inflation to nearly 60 percent.

Cyclone Idai, who earlier this month hit the Mozambican coast, could worsen the situation because it devastated the Beira harbor, which is the key channel for gas and wheat imports in Zimbabwe, claims Stratfor, Texas.

Also, the low bid on the interbank market pushes the Zimbabwean companies into the black market.

The volume of trading over the past three weeks was $ 45 million, according to local reports, citing central bank governor John Mangudyu.

Parallel market "is mostly made by desperate customers and retailers," said Welcome Mavingire, managing partner Intellego Investments Consultants in Harare.

Meanwhile, retailers complained about foreign currency shortages, which undermined their ability to replenish inventories.

That is, some stores did not supply enough customers with a variety of basic products.

Some, however, intentionally underestimated the products in an attempt to sell their products at prices that match the rate of the day.

"The supply of goods is limited by the manufacturer to the retailer." We had a long-standing problem, especially in the production and supply of cooking oil. "The offer is irregular, the offer and the capacity are limited due to limited foreign currency offerings," said Zimbabwe's Confederation of Retailers Denford Mutashu.

"Even interbank rates have failed to improve the situation because it is based on a willing seller that is ready for the buyer, so in the end we have more customers than sellers.

"This has led some small and medium-sized companies to import products outside the country because they have access to foreign currencies through a parallel process. But conventional trade can not do this because they can not get forex from banks and their clients mostly use the RTGS dollar," he added Mutash.

Confederation of Zimbabwean Industry Chairman Sifelani Jabangwe told the Daily News on Sunday that a weakening of the US dollar would likely stimulate further price increases.

"You will see some prices that are starting to grow and therefore push the governor to make the system more effective," said Jabangwe.

"We still have trouble getting a foreign currency, so we're still lapping the governor to fine-tune the system, but we hope that opening the tobacco floor will improve the situation," he added.

Zimbabweans are subject to constant price increases, based on the daily rate set by the black market, which is currently 1: 4.3 compared to USD.

Over the past few months, prices of some basic goods have increased shocks by as much as 300 percent, creating wastes in the economy and burdening zimbabweans who no longer have the money.


Source link