Government is taking measures to ensure that there is stability on the foreign exchange market, a situation that is crucial in addressing the issue of the tier pricing system.
This follows a drastic fall of the RTGS against the United States dollar on the parallel market. In the week ending 12 April 2019, the average exchange rate stood at US$1: 4.20RTG$, a situation that has led pharmaceutical companies and other retailers to peg their prices against the parallel market rate in a three tier system.
Speaking during the Zanu PF National Youth Assembly yesterday, President Emmerson Mnangagwa gave a stern warning to those operating under the tier system.
“Unjustified increases of prices, we urge our compatriots in industry and business to desist from this inhuman crime which has brought untold suffering and misery to our people by increasing prices wantonly.
“However, government is in the process of meeting stakeholders in the sector for discussions around issues of prices. We cannot have the continued exploitation of our people by those who exhibit rent seeking behaviour in industry and commerce,” said President Mnangagwa.
Meanwhile, there is improved dispensing of RTGS$ cash by banks across the country. Most banking institutions continue to meet the RBZ weekly cash withdrawal limit of 300 RTGS$.
In the short to medium term, stabilisation of the foreign exchange market could be enhanced through mechanisms that promote the convergence of the parallel rate to the interbank rate, through managed supply of RTGS$ cash as the cash rate has been consistently stable and lower than the transfer rate. The stability on the foreign exchange market is crucial to addressing the issue of the three-tier pricing system and inflation.