Mangudya Says Prices Should Be Linked To Exchange Rate

Reserve Bank of Zimbabwe (RBZ) Governor John Panonetsa Mangudya has implored all businesses to exercise self-discipline in pricing to avoid forcing authorities to take action.

Mangudya issued the warning to businesses that have benefited from the foreign currency auction but have continued to set prices using parallel market rates.

Mangudya noted that some major retail chains have started to set their prices using the 1:70 official exchange rate but others are still using the black market rate. He said:

We have noticed that a number of large retail operators, that includes OK Zimbabwe and others, their pricing is now linked to the exchange rate, even markets in Mbare that are now using a cash rate of $70 to US$1, which is in line with the auction market rate, but then there are some businesses that are still using an implied rate of $80 to $90 per US$1.

These rates are higher than the auction rate, although they have gone down from where they were, which was between $100 and $120 against the US dollar and any coming down of the rates means stability is coming.

But we want to see all business entities exercising self-discipline; because you cannot come to the auction and buy (forex) at $70 to US$1 and benefit from exchange gain by charging higher prices.

The RBZ introduced the Foreign Exchange Auction System last month, with the highest bid rate of $100 on the first auction on June 23.

The highest bid rate fell from $100 to $95.92 and $85, in the following two weeks, respectively.

More: The Herald

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