Simbababwe-dollar could collapse, business lobby warns-economy
Simbababwe-dollar could collapse, business lobby warns-economy
A Zimbabwischer Business Lobby Group, the Confederation of Zimbabwe Industries (CZI), has warned that the country's currency could collapse if the authorities do not "implement political measures that are necessary for their support".
Central bank approach unsettled the market
In a letter from Bitcoin.com News, the President of the lobby group, Kurai Matsheza, said that the clumsy approach to the foreign exchange challenge would unsettle the markets. In order for this challenge to be mastered in full, the CZI boss insists that measures that have been agreed by the consultative parties only become effective after the period has expired.
After the collapse of the Cimdollar in 2008, Zimbabwe changed to a multi-currency system in which the US dollar dominated. In 2019, however, the Zimbabwe-Dollar or ZwL, which was then at the level of the USD, was reintroduced.
Almost two years later, the ZWL/USD exchange rate is now 88: 1 in the official market and over 170: 1 at the parallel market. In order to stop the persistent devaluation of the ZWL on the parallel market, the Zimbabwischen authorities therefore started a lightning campaign, in which law enforcement authorities arrest alleged foreign exchange traders. At the same time, the central bank put people on the black list who are accused of worsening the sufferings of the cimdollar.
However, it is this surgery against black market tread dealer who prompted the CZI boss to write the letter that expresses the concern of his organization on this procedure. He said:If guidelines fail, we should not arrest people, we should correct the guidelines for their effectiveness.
he added that the arrests only cause unnecessary panic on the market and undermine the trust of consumers into government policy.
The Dutch auction system
Meanwhile, Matsheza insists that only "a real Dutch auction would perform the function of the price finding and pave the way for a liberal exchange rate regime". The Central Bank introduced this auction system as a means of managing the currency allocation.
Nevertheless, some companies and individuals complained that they took several months to get their allocation. These long delays forced companies to find the resource on the parallel market on which the USD is easy to find. Although the CZI does not yet require an end to this auction system, Matsheza still asks the authorities to ensure that the auction system is managed "in the true spirit of the Dutch auction system".
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