The Confederation of Zimbabwe Industries (CZI) has welcomed the decline in monthly inflation alongside the stabilisation of the foreign currency exchange rate on the parallel market.
The monthly inflation rate in August 2022 dropped to 6.6% from the July 2022 rate of 16.1% while the exchange rate has hovered between ZWL$700 to ZWL$800 against US$1 on the parallel market over the past few weeks.
This has been attributed to interventions by monetary authorities that include the introduction of gold coins and the move by the government to stop payments to its suppliers.
Speaking exclusively to NewZimbabwe.com, CZI president Kurai Matsheza said that the developments will go a long way in providing a strong basis for business growth. He said:
These trends seen in isolation are quite good. Indeed, nobody enjoys seeing inflation galloping and exchange rates going haywire. It is indeed a very welcome development.
Matsheza, however, lamented the shortages of the Zimbabwe dollar in the economy saying this has resulted in depressed demand for goods. He said:
So the downward side which must also be considered are the critical shortages of the Zim$ in the market.
We have seen local currency sales going down for reasons we believe to be prompted by the rush to purchase gold coins and the move by the government to stop payments to its suppliers.
Meanwhile, former Finance Minister Tendai Biti has challenged the government to find a lasting solution to current economic challenges instead resorting to what he considers unsustainable short-term measures.
He said the “stability” will soon be a thing of the past as the government will need to pay civil servants and fund command agriculture and election promises which will result in an increased broad money supply and trigger exchange rate volatility.