Industry has widely commended the stance taken by government to abolish the multicurrency system and the subsequent measures introduced by the Reserve Bank of Zimbabwe (RBZ) to support the local currency by increasing the supply of foreign currency.
Government abolished the multicurrency system to avoid the full dollarisation of the economy and safeguard vulnerable members of society.
The value of the local currency is expected to be preserved allaying any fears of a potential increase in the prices of goods after scrapping the multicurrency system.
The RBZ said it will adopt all foreign currency denominated legacy debts of companies and pay creditors on a 1:1 ratio with the Zimbabwe National Chamber of Commerce Harare Chapter chairperson, Mr Mike Kamungeremu saying the move is a master stroke.
“We applaud the move taken by government as it means that the companies who had foreign currency obligations will be guaranteed to pay them after the central bank adopted these legacy debts. This will reopen supply lines of critical imports and at the same time mop up excess liquidity from the market,” he said.
To increase competition in the trading of foreign currency the central bank has with immediate effect stopped controlling rates at which banks and bureaux de change buy and sell foreign currency as a way of further liberalising the economy.
Mr Denford Mutashu of the Confederation of Zimbabwe Industries added that these measures will fully support the stability of the local currency and eradicate indexing of prices to the US dollar.
“The continued use of the US dollar was making it difficult to manage the economy because companies had resorted to indexing prices to the US dollar. Hence, the move is welcome as it will create a level playing field and set the economy on a strong growth trajectory,” Mr Mutashu said.
Speculators were using the Zimbabwe Stock Exchange to make huge profits on selected stocks hence the central bank has moved in to control how these shares are bought and sold, a move that will stabilise markets.
Foreign currency inflows on the interbank market is expected to rise as by selling exporters retained proceeds of up to 50 percent and supplementing it with letters of credit said national House of Assembly proportional representative Tatenda Mavetera.
“The use of letters of credit to the tune will provide a springboard for companies to access foreign currency and this will ensure that there is continued presence of goods on the shelves,” said Honourable Mavetera.
Due to low interest rates loans had become very cheap and people were borrowing to trade in forex thereby unnecessarily putting pressure on rates hence the central bank has increased interest rates from 15 percent to 50 percent in line with inflationary trends.