Patrick Chitumba, Midlands Bureau Chief

PRICES of most commodities have been stable in the past three weeks, a positive development attributed to the bold step by Government to introduce the foreign currency auction system.

The Reserve Bank of Zimbabwe replaced the interbank market with weekly foreign exchange auctions in June to determine the Zimbabwe dollar exchange rate together with industry and commerce, and also to improve transparency and efficiency in trading of forex in the country.

The move was also meant to discourage the parallel market.

It is hoped that small players will also be able to participate in the foreign currency auction system to allow continued stability in the prices of goods, including the basic commodities.

The Ministry of Industry and Commerce’s recent report indicated that prices of most products, especially chickens, economy beef, bath soaps, eggs, flour, vegetables such as cabbages and tomatoes had stabilised.

Zanu-PF Midlands provincial chairperson Engineer Daniel Mackenzie Ncube told a party Provincial Coordinating Committee meeting at the weekend that was graced by President Mnangagwa that two years down the line, the Second Republic is making great strides in turning around the socio-economic situation of the country.

He said the Zimbabwe dollar is stabilising — a development that has resulted in the stabilisation of prices of goods and services.

“Your Excellency, the country is in safe hands with your Government at the helm. You are introducing policies like the foreign currency auction system that has stabilised the local currency. You made a bold decision and we thank you. From August, the prices have been stabilising and we know that Zimbabwe is in safe hands,” said Eng Mackenzie Ncube.

Responding, President Mnangagwa said Government realised that official foreign currency exchange rate was being pushed up by the black market rate.

He said the exchange rate was “flying everyday” because of the informal economy that had been created until Government set up a committee to look into it and discovered that there was about $18,4 billion that was circulating outside the banking system.

President Mnangagwa said they realised that there was phantom money which could not be explained but was circulating in the country.

“The committee realised that there was $18,4 billion which was just there and could not be traced. It didn’t stand for anything. We found out that there was person trading $86 million from the phone with no working experience at all but has $86 million which no one made a police report to say it had been stolen.

“Someone lodging in a one room with that amount of money. We saw that Ecocash was creating all this and we came up with the foreign currency auction system. The move has paid a lot of people and innocent Zimbabweans because they could send and receive money in whatever large quantities they wanted. We then allowed people to transact $5000 a day and it must reflect in the bank system or account,” he said.

President Mnangagwa said they also introduced a second auction for SMEs with the limit of $20 000.

“During the first week of the foreign currency auction, some companies came and said there was $500 million, and they offered rates of US$1:$120. Then others offered US$1:60, and others US$1:82. We will then give them money and when they went away, they would realise that they all got the foreign currency with different rates and that forced them to all come down,” he said.