Zimbabwe central bank allays fears of basic commodities shortages amid forex scarcity

Source: Xinhua| 2017-09-24 18:45:28|Editor: Zhou Xin
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HARARE, Sept. 24 (Xinhua) -- Zimbabwe's central bank has dismissed social media reports claiming that there will be shortages of basic goods on the market due to foreign currency shortages.

"Peddling of such fake news is quite unfortunate. There are no shortages of basic commodities in Zimbabwe. On the contrary, foreign exchange allocation for basic and essential commodities has been increased to ensure that shortages of commodities do not occur within the economy," John Mangudya, governor of Reserve Bank of Zimbabwe, said in a statement Sunday.

The rumors have triggered panic buying and hoarding of basic commodities by the public.

The prices of most basic goods has gone up in recent weeks, igniting fears of shortages experienced during the peak of the hyper inflationary era in 2008.

Although Zimbabwe introduced bond notes in November 2016 to tame cash shortages, the bank note shortages have intensified causing the emergence of the forex parallel market where the U.S. dollar is being sold for a premium.

Zimbabwe introduced multiple currencies in 2009 after its currency had been rendered worthless by hyperinflation. The multi-currency basket has nine currencies including the U.S. dollar, British Pound, Euro, Chinese yuan and Japanese yen.

However, the U.S. dollar is currently the main trading and circulating currency in the country.

On the parallel market, dealers are reportedly asking for at least 135 in bond notes for one to get 100 U.S. dollars.

Mangudya said the premium on the parallel market was not caused by bond notes or electronic payment systems but the mismatch between U.S. dollar bank balances and the physical foreign currency available in the economy.

Zimbabwe has for years been unable to generate enough foreign currency to meet its requirements due to low exports and absence of balance of payment support from multilateral lenders.

Mangudya said the Ministry of Finance did not and will not print excess bond notes to buy U.S. dollars from the streets as suggested in the social media reports.

"Such malicious statements are counterproductive and are meant to sabotage the economy that is on the rebound on account of the good agricultural out turn," the central bank governor said.