Dollar tumbles

Zimbabwe’s failure to stock up shelves that were emptied of basic commodities when the government ordered controversial price slashes in June as well as its failure to procure fuel has resulted in the Zimbabwe dollar tumbling to unprecedented levels on the black market.

Reports say the situation is so critical that Industry and International Trade Minister, Obert Mpofu, who spearheaded the price reductions, has been secretly approaching private fuel importers to resume business promising that he would allow them to adjust prices every week but they are reported to have turned his offer down.

Fuel importers are reported to have told Mpofu that prices should be determined by the market and not by the government.

The dollar seems to have started its rapid slide after the mid-term monetary policy review statement by central bank governor Gideon Gono last week.

Gono said goods should be back on supermarket shelves before the end of this month. He also said he had secured a US$200 million revolving facility to import fuel. But the market seems to have received the news with a lot of scepticism.

The price of fuel shot up from about $400 000 a litre to $700 000 a litre. The Zimbabwe dollar fell from about $65 000 to the Botswana pula to $95 000 while it tumbled from $55 000 to the rand to $82 000. Commuter omnibus operators also hiked their fares to between $150 000 and $200 000 a trip.

While some goods have started reappearing on the shelves the prices are up to 10 times those that prevailed before the price slashes.

One of the market traders said the price freeze had indeed arrested the slide of the Zimbabwe dollar for some weeks because people stopped crossing to buy goods, including fuel, for resale.

“Now, it’s a free for all again,” he said, “and the dollar is tumbling.”

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