Zimbabwe Finance Minister says given the US$1 billion from IMF there is no reason why Zimdollar should continue to weaken

Zimbabwe Finance Minister Mthuli Ncube today said the US$ 1bilion that Zimbabwe received from the International Monetary Fund in the form of special drawing rights should bolster the country’s foreign currency reserves so there is no justification whatsoever for the local currency to continue weakening against the greenback.

Responding to questions from legislators on what the government was doing about the run-away black market rate which is being used by business to peg prices, Ncube said the country could not be held to ransom by a minority of economic players who were pushing the black market rate.

One legislator said the black market rate was as high as $166 to the greenback against the auction rate of $85.

“We want to be clear about that because it is a rate that is driven by the minority of economic players.  The majority of the economic players are receiving money from the auction,” Ncube said.

“In the last 12 months, at least companies have received no less than US$400 million for re-equipping purposes.  I am just targeting one area that is retooling.

“Secondly, anyone is free to express whatever exchange rate they wish to purchase the United States dollars at.  So those who feel that they ought to be buying the United States dollar at higher prices – they are free to express that wish through the Dutch auction.

“Why do they not go ahead and do that?  Why should the whole market then be forced to shift towards power rate, shadowy people that we do not understand?”

Ncube said he hoped that the money Zimbabwe had received from the IMF would stabilise the local currency.

“We have just received almost a billion US dollars which should go a long way in bolstering our foreign reserves and that money is already in our reserves and accounted for as such.  Therefore, there is no justification whatsoever for the exchange rate to keep weakening.  It should be going the other way,” he said.

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