RBZ dismisses Imara Capital predictions, says current volatility temporary
Business Reporter
THE Reserve Bank of Zimbabwe (RBZ) has dismissed predictions by Imara Capital predictions that the the ZWL will decline rapidly this year further tumble on the back of declining commodity prices.
Speaking to the media this week, the RBZ governor Doctor John Mangudya begged to dispute the Imara Capital prediction that the ZWL will weaken further due to the fact that commodity prices are weakening on the international arena.
As a result,the experts firm believes the bulk of the country’s foreign currency earnings comes through minerals, the softenng prices effectively means that foreign currency inflows to Zimbabwe will be reduced in a development which will prompt more pressure on the exchange rates market which will fuel ZWL depreciation due to demand factors.
“I don’t share the same perspective. We have new export minerals in the basket such as lithium which weren’t there before. If we earn $100 million from lithium it can help compensate for decreases in other commodities,”he said.
The outgoing RBZ exchequer also described the current ZWL volatility in the markets as just temporary and driven by other factors largely not economical.
“People think it’s an exchange-rate issue, but it’s largely confidence-related.The activity which we have seen in the parallel market in the last three to four weeks is a response to the desire to hold foreign currency.
“The volatility has led citizens to favour the US dollar to pay for everything from food to fuel. It’s used in about 80% of all transactions, with the balance done in Zimbabwe dollars, which stokes inflation as prices are heavily influenced by exchange-rate movements.
“We have economic stability, but currency instability,” he said.
