Responding to questions at Chatham House in London where he was speaking on how he is going to revive Zimbabwe’s economy, Mthuli Ncube said the market was doing his work for him and he did not want to argue with it.
In his monetary policy statement last week, Reserve Bank of Zimbabwe governor John Mangudya re-introduced foreign currency accounts leaving Zimbabweans wondering what currency was remaining in their real time gross settlement accounts.
The opposition Movement for Democratic Change said Mangudya had created a local currency through the back door, and some people are calling it zollars.
Mangudya said the bond note and the US dollar were at par but the black market rate has shot up since then with bond notes yesterday trading at a premium of 200 percent.
“The market is setting the pace,” Ncube said yesterday. “What is left for us is choreography and management of the economic fundamentals. The economy has dollarised. RTGS balances are over $6 billion.”
Ncube went on: “The market is doing everything, we are going through a transition. The market has said these currencies are not at par. I don’t want to argue with the market. The bond notes will, at some point, have to be demonetised and I cannot tell you when that will be.”
Ncube, however, ruled out allowing the currency to free-float right now.
“Let me repeat, it would be economic suicide for this economy if the Government of Zimbabwe was to do that. That would mean overnight, people will offload their RTGS balances and purchase the little foreign currency that is on the market…,” he said.
“By doing so, it will be inflationary and you are going to ask for higher salaries and at the end of the day, we will have spillover effects.”
The new policy announcements have seen prices of commodities rocket, including those that are locally manufactured.
The price of bread has risen from $1 to $1.50 while transport costs normally pegged at 50 cents are now 75 cents.