The Minister of Finance and Economic Development, Mthuli Ncube has distributed a note about the exchange rate between the Zim Dollar and the USD. This is on the backdrop of a massive devaluation of the local currency on the official and parallel markets respectively.
On Friday morning the USD:ZW$ rate on the interbank market was 1:14.43 and on the parallel market it was 1:20.5. The rates changed and the local currency regained some value slightly by the end of the day after news broke out that the central bank had frozen accounts operated by some big businesses believed to be fueling currency speculation.
Here is the full text and diagrams from Muthuli Ncube:
This note aims at providing founded quantitative estimates of an appropriate exchange rate between the Zimbabwe Dollar and the US Dollar.
There are several limitations, both conceptual and concerning the availability of data, when trying to establish the appropriate exchange rate for Zimbabwe.
It quantifies the ZWL$/US$ exchange rate based on the real exchange rate with South Africa, deriving the nominal exchange rate rate that would keep real purchasing power of the currencies at 2011 levels, a year of relative macroeconomic balance.
For August 2019, the most recent period for which the necessary data is available, this suggests a nominal exchange rate of about ZWL$5.6 per US$.
This is substantially lower than the average Interbank rate in August (ZWL$10.0 per US$), as well as the average prevailing parallel market rate (around ZWL$11.2 per US$).
By this benchmark, the currency was therefore, on the interbank market, undervalued by 26% on average since February 2019, peaking at 52% in July. On the parallel market (not depicted), the average undervaluation was of 50% since February, peaking at 61% in June.
Minister of Finance and Economic Development 20 September 2019
The irnony of all this is that the president once declared that local currency was grossly over valued.
Anyway, if you want to keep track of what’s going on with the rate on the different markets you can simply message the word ‘Rate’ to our Techzim Market bot on WhatsApp: 0719696102
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12 comments
Please ED fire him with immediate effect. Please will you from today start looking after ZIMBABWE! We need someone new with common sense & economic experience. He has none. PLEASE ED SAVE US FOR ONCE.
Sounds like your hateful passion for the man is from another source.Remember he is not the one who destroyed the economy of this country.That you know very well.
But he came in to better the situation, but hv worsened it with his Eurocentric theories… For example, he still dreams of “price discovery/market forces”, when
1) RBZ and his ministry don’t hv the capacity to inject necessary funding to prop up the RTGS$ against the greenback
2) The economy de-industrialised over 2 decades, and so there is no competition in the industry at all, eg Delta!!!
He can’t do anything. His brain is paralyzed with stupidity and decay economic sense
As long as we have a “legalized” parrarell market/black market economy, things will not work.
it should be, why is it not that figure
what is he doing so that it reaches that figure
How does he explain the new fuel prices then. He is the one who said quite some time ago that fuel should be 10zwl
In addition does he want free market or not. What does he have to back the currency so it will stay at 5.6. Does he even understand how currencies work.
There is no need to blame our minister, we are actually problematic to him .we focuses more on failures not solutions. everything is temporary on earth let us give him chance.
What type of weed does he smoke???
I think he is really trying hard to fix the Economy ,but it is not that easy..don’t blame him…
ED fire him