By Alois Vinga
BLACK market foreign currency exchange rates have remained fairly stable for almost two months with dealers attributing the trend to a reduction in demand.
A random assessment by NewZimbabwe.com Business confirmed that the rates have not shifted much over the past two months.
“If one exchanges one United States dollar, they receive $3.30 cash in bond notes or $3.80 through Ecocash and RTGS,” said one forex dealer operating at Eastgate Shopping Mall.
“Just a week ago, the transfer exchange rate reached a peak of $4 against USD$1 but the premiums quickly tumbled to the current rate.”
Zimbabwe is currently experiencing foreign currency shortages which have led people to resort to the parallel market.
A three-tier system is used on the streets depending on whether one is trading in EcoCash, bond notes or the electronic RTGS currency.
Last year the black-market rates were partly driven by government’s employment of quasi-currency instruments such as treasury bills to fund its activities, a move that led to a growing mismatch between money in circulation and RTGS balances.
However, the finance ministry has been employing a number of measures aimed at reducing money supply and limiting government expenditure.
Assessing the current trends on the parallel market, economist Persistence Gwanyanya attributed the current stagnation of rates to the effectiveness of government policies and reduced money supply.
“Since October last year government has been putting in place mechanisms aimed at reducing money supply and, as such, no treasury bill or extra money has been channeled to the market hence these factors have contributed to the situation obtaining in the parallel market,” he said.
For fellow economist, John Robertson however, the current trends are a result of the realisation by the parallel market that continuous increases will lead to loss of value in the long term.
Monetary authorities insist on a 1:1 parity between the three types of quasi local currencies and the US dollar but no one can walk into a bank and secure foreign currency at that rate.