Business Reporter
TOP economist, Persistence Gwanyanya says the current hype on the exchange rate front will soon be watered down as excess ZW$ liquidity in market continues to dwindle on the back of robust strategies being employed by authorities.
Gwanyanya also sits in the RBZ Monetary Policy Committee (MPC).
The ZW$ value has tumbled on both the parallel and formal trading market in recent weeks reaching a high of US$1:ZWL 6 500 this week.
Members of the public have been motivated to chase after the US$ on the back of anticipated local currency value decline in the coming weeks.
But speakig to the media this week, Gwanyanya predicted that the frenzy in the market will soon be a thing of the past.
“The current official rate reflects the tight ZWL liquidity position. Out of around ZW$220 billion total usable balances as of last week, after trades on both platforms we closed the week with just ZW$180 billion which is set to go down further in coming weeks.
He said the plans, coupled with quarterly tax collections by the treasury alongside recent measures to allow the purchase of electricity and payment of taxes in local currency are expected to mop up more ZWLs from the market which had ordinarily found their way to the parallel market.
“Going forward, we are therefore likely to see a reverse situation ,while currently the market is characterized by purchases of the US$, they will still run short of ZWL to meet ordinary obligations. This means banks will be in a position to be attract liquidity for wholesale trade and we will be returning to normalcy,” added Gwanyanya.
Below are stats from this week’s RBZ Auction
