Mthuli Ncube disowns 1:1 exchange rate again

Harare –  Zimbabwe’s finance Minister, Mthuli Ncube, has said the US dollar in Zimbabwe is not equal to the bond note or the RTGS, trading pseudo currencies in the Southern African country.

Zimbabwe holds that the exchange rate for the USD, which is the official currency in a multi currency system introduced in 2008, to the local equivalents not officially recognised as currency in the form of bond notes, an export incentive and the RTGS , which is electronic balances, are at par.

This fixed exchange rate regime has grossly destabilised the market resulting in acute shortages and disequilibriums in the market and subsequent sharp price increases in reflection of lagging supply and the shortages of US dollars, which are necessary for the much needed imports.

In an interview at Davos, Mthuli Ncube who is leading the Zimbabwe delegation, told SABC News of South Africa that Zimbabwe’s fuel is not the most expensive in the world.

“Our fuel is not the most expensive in the world, that report is erroneous, in fact, our fuel in USD terms is about just over a $1,” he said.

By implication this statement means the Minister does not believe or does not recognise the US dollar to be at par with the local currency which is used in fuel pricing.

A fortnight ago the President raised the price of fuel by 250% to $3.30 litre for petrol and $3.10 a litre for diesel respectively.

These prices are marginally shy of the parallel exchange rate for the USD which at the point of the fuel price increase was around 320% to the local currency money.

A price of $3.30 in bond note or RTGS would be indeed be equivalent to USD1 or marginally above the parallel exchange rate prevailing at the time of fuel hikes.

It is this real exchange rate widely quoted and factored by most players on the local market, that Mthuli said he believes in and used to defend the fuel prices.

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