Zimbabwe currency volatile yet the country has US$2 billion in Nostro accounts 

HON. SEN. KOMICHI: My question is on last week’s figures, the statistics that were publicized in Harare that 80% of our population is using US dollars and only 20% are using the local currency.  This means that in the near future we would reach the 100% US dollar currency mark.  My question is; what measures do you have in place so that we go back to the local currency?  I thank you.

HON. CHIDUWA: Thank you for the supplementary question that was raised by Hon. Sen. Komichi.  Indeed, the statistics that you mentioned are correct, even ZIMSTAT published such statistics. I believe that we need to reach a stage where the people are comfortable in using multi-currency.  We can only reach that stage when we reach a certain level of stability. When our exchange rate stabilizes, if our currency does not fluctuate against the US dollars, we have reached currency stability.  So, for us to reach a stable exchange rate, we need to produce. Production is important for it will give us exports and foreign currency.  It will give us local currency in abundance.

 Our market relates to the auction but in the long term, we need to allow demand and supply, the basics of economies of scale, to determine the economy.  When our exchange rate is determined by the market, there is no manipulation and there is no preference of which currency because the true value of the currency will be determined by the market.  The challenge that we face right now is that there is a parallel market which is being influenced by expectations of people. Our fundamentals are good because we have a surplus. Our Nostro balance is around US$2 billion. If we have US$2 billion Nostro balances then there is no reason for us to say that our currency is volatile. So we want to reach that stage where there is currency stability. When we reach such stability, people will be use whatever currency whether US or RTGs.  We need to focus on production.  I thank you.

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