Zimbabwe Finance Minister Mthuli Ncube today came under fire when he said the Zimbabwe dollar is undervalued and should be trading at 6:1 against the United States dollar.
The local currency plunged to 25:1 against the United States dollar on Thursday before the central bank froze the accounts of at least four companies owned by close associates or relatives of President Emmerson Mnangagwa.
The rate appreciated to 15:1 and Mnangagwa told supporters in New York where he is attending the United Nations General Assembly meeting that it is likely to continue appreciating.
Critics were, however, sceptical about what they termed temporary solutions.
“The exchange rate of the #Zimbabwe Dollar to United States Dollar is way undervalued. The exchange rate of Zim$ to US$ should be around 6 at the moment, on the basis of the real exchange rate (RER) relative to the South African Rand,” Ncube tweeted.
Movement for Democratic Change vice-president Tendai Biti, a former Finance Minister in the inclusive government, immediately shot back: “Mahumbwe chaiyo. Zimbabwe has no productivity. 2019 GDP is likely to be around -8 % . There is massive corruption fueling massive increase in money supply. The current account is in massive deficit .So you have to be mad or drunk , or both to reason like this . Worst gvt in world.”
He was backed by Baba vaT: “You failed to make Barbican work and you think you can make Zimbabwe work? Just asking. If you failed on a small company which was “your brainchild” what more a whole country? Go back to your hole where you were hiding dude. Chinhu charema ichi hachisi chenyu.”
Mnangagwa said the Zimbabwe dollar was steady for six to eight weeks until some “smart” people found ways to manipulate the currency.
His administration, he said, had, however, become smarter but critics doubt this.
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