- The Association said it incurred over US$66 million in exchange losses
- It also flagged pessimism about more exchange losses in the outlook
- To counteract that, the body has resolved an upfront payment for all Zimbabwe dollar purchases or at least cash on delivery
Harare- The Grain Millers Association of Zimbabwe (GMAZ) has incurred over US$66 million in exchange losses due to the rapid depreciation of the local currency.
GMAZ accounts for 95% of the national supply of maize meal and flour in the country.
In a circular, the Association said: “The volatility in the past weeks that continue to negatively characterise our macro-economic environment has regrettably created phenomenal challenges and limitations that are debilitating our operations.”
“Major exchange losses of over US$66 million have been incurred and more will continue to be incurred.”
The association said it is owed circa ZWL12.8 billion in outstanding payments of goods supplied in the past 90 days. With record depreciation of local currency every week, the body said more losses will be incurred.
The Zimbabwe dollar has been struggling to find its course, having depreciated by 57% in June alone widening year-to-date losses by 89%. This is hurting suppliers as big retailers buy goods on credit using the Zimbabwe dollar.
As a bailout mechanism, the Association resolved an upfront payment for all Zimbabwe dollar purchases or at least cash on delivery.
However, the Association said credit sales in US dollar terms will remain.
The Association said circa 80% of its production costs are now US dollar-denominated.
This is a bigger challenge being posed by the Zimbabwe dollar. The local currency has failed one of its simple, key duty of preserving value, hence, facing rejection from the market.
The simple call displayed by the company is that the Zimbabwe dollar has failed and there is a need to dollarise.
The market has already self-dollarised and forcing it to accept the embattled local currency will only curtail production and productivity.
The Zimbabwe dollar has failed and forcing it into the market will not work. It won’t hurt local producers only, but also exporters through surrender portions to RBZ.
Without addressing the confidence crisis, companies will continue recording heavy losses in Zimbabwe dollar payments.
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