Business leaders and industry executives have called on the Reserve Bank of Zimbabwe (RBZ) to fully liberalise the foreign exchange market and allow market forces to determine the exchange rate.
Speaking to Business Times, Zimbabwe National Chamber of Commerce (ZNCC) president Tapiwa Karoro said:
There is a need for a consistent implementation of a market-determined exchange rate system that will provide a more predictable and stable economic environment, reducing speculative market behaviours.
The central bank should improve the availability and accessibility of foreign currency at banks for importers.
The RBZ should also ensure transparent and efficient processes for businesses to access foreign currency, which is crucial for import transactions and economic stability.
Confederation of Zimbabwe Industries (CZI) CEO Sekai Kuvarika said that the managed currency rate regime has put companies in a difficult situation. She said:
We have a badly misaligned exchange rate system in the country. What we need is stability and what we need is an efficient price discovery mechanism and well-functioning forex accessing platform.
…We need the forex to be correctly priced so that everyone benefits from it and that’s our constant position up to today.
Also speaking to Business Times, Economist Prosper Chitambara said that the exchange rate seems to be managed, rather than allowed to float freely. Said Chitambara:
The depreciation of the local currency is pointing to the rigidity of the interbank system. There is a need to fully liberalise the interbank bank system.
There is a huge mismatch between the demand for forex as there are so many willing buyers and very few willing sellers.
This makes forex scarce and this points to some distortions on the interbank systems which is causing the platform not to be fully reflective of that market dynamic forces of demand and supply.
The exchange rate seems like it is being managed and is not allowed to freely float. Liberalise the interbank to allow the forces to be fully reflected in the exchange rate.
Another economist, Gift Mugano, also called on the Central Bank to fully liberalise the exchange rate for the Willing Buyer, Willing Seller (WBWS) system to work. He said:
The governor of the RBZ must liberalise the exchange rate as there is clear evidence that the willing buyer willing seller is not working because the exchange rate is commanded by the central bank.
He must float the exchange rate to become a discovery mechanism in the market so that players can freely trade forex.
I don’t see the rationale of him [Dr John Mushayavanhu, the governor of the RBZ] running a controlled exchange rate in real practice.
It does matter how he tries to defend the Willing Buyer, Willing Seller (WBWS) system as banks are not giving bidding companies forex. What is that?
We are fooling ourselves.
Dr Mushayavanhu said all the companies with genuine need for forex should go to the bank and get it, he must walk the talk on that.
We don’t want to be told that reserves have increased from US$280m to US$350m, they mean nothing if we hear that we have a backlog of the same invoices.
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