eBusiness Weekly
Business Writer
The prices of most goods and services in formal retail shops and wholesale have doubled in the past two weeks after the Zimbabwean dollar plunged against major currencies, particularly the US dollar.
The exchange rate, which stood at $5 903:US$1 on December 12, 2023, now sits at a staggering $9 414.
The current exchange rate on the parallel market stands at an average of $15 000 Zimbabwean dollar to US$1, reflecting a continued depreciation of the local currency.
Currently, businesses apply an exchange rate of the auction rate plus 10 percent when trading.
This has seen a massive loss of US dollar sales in the formal sector every time there is a wide parallel market premium.
The dramatic devaluation of the Zimbabwe dollar is largely attributed to a combination of factors, including, increased demand of the greenback as a result of lack of confidence, Reserve Bank of Zimbabwe governor Dr John Mangudya said last week.
Zimbabwe’s export earnings have been declining in recent months, putting further pressure on the availability of US dollars in the formal market.
The consequences of the exchange rate hike are being felt by ordinary Zimbabweans, who are struggling to afford basic necessities such as bread, cooking oil, sugar, laundry soap among others.
“It is getting very difficult to survive,” said Sly Magunda, a secondary school teacher in Mutasa district said.
“My wages have not gone up, but the price of everything has doubled. I don’t know how I am going to make ends meet.”
Economists warn that the situation is likely to worsen in the coming months if the Government does not take decisive action to address the underlying causes of the currency crisis.
“The Government needs to implement a comprehensive economic reform package that includes measures to boost exports, attract investment, and restore confidence in the economy,” Carlos Tadya, a Harare based economist said.
