Finance Minister Mthuli Ncube said the government would not be forced to follow the parallel market exchange rate.
He was responding to MPs in a question-and-answer session on Wednesday about the continued rise of the US dollar against the Zimbabwean currency.
However, the government insists that the exchange rate has been stabilized due to the introduction of the Reserve Bank of Zimbabwe (RBZ) auction rate system introduced in 2020.
However, Zanu PF MP Joshua Murire told Ncube that while the formal exchange rate has stabilized, black market rates continue to rise, thereby determining the prices of goods and services.
âWhat is the ministry’s policy to stabilize prices that are indexed using the black market rate? asked Murire.
In response, Ncube said, “We will not follow the parallel rate. We want to be clear about this because it is a rate that is determined by the minority of economic actors. The majority of economic actors receive money from the auction, âsays Ncube.
The minister warned companies feeding the parallel rate that risked being shut down.
He added that several companies had received more than US $ 400 million for re-equipment from the government.
âI only target one area that is being retooled. Second, everyone is free to express the exchange rate at which they want to buy US dollars. So, those who think they should buy the US dollar at higher prices are free to express this wish through the Dutch auction.
“Why don’t they go ahead and do that? Why then should the whole market be forced to look to the electricity tariff, obscure people we don’t understand ? “
Dzivaresekwa MDC Alliance MP Edwin Mushoriwa said black market rates hover between around US $ 1 and US $ 166, while the auction rate hovers around US $ 1: 85.
“Given these huge differences, isn’t it possible that the foreign auction system is in fact fueling the rate hike in the parallel market because the people who get the money at the auction rate are actually doing arbitration and make sure they take that money? ” said Mushoriwa.
According to Ncube, the government was aware of some of the culprits involved in feeding the black market.
âWe know some but not all of them. Those we know, we have taken action, we have arrested them and we have instituted penalties for this type of behavior.
“We will be very happy to receive this advice and then follow up with individuals and businesses breaking the law so that there is full compliance. We need order and discipline.
“We have just received nearly one billion US dollars, which should go a long way to strengthening our foreign exchange reserves and this money is already in our reserves and recorded as such”,
Ncube added: “There was no justification for the exchange rate to continue to weaken. It should go the other way.”