Government Expects Prices Of Goods To Drop

RBZ Governor, Dr.  John Mangudya said the government expects the prices of most goods and services to drop or stabilise in the short to medium term due to the floated exchange rate.

Mangudya said the government will ensure this happens as it will inject foreign currency from lines of credit. He didn’t specify the sources of this credit.

Said John Mangudya yesterday during the presentation of the monetary policy statement:

The use of RTGS dollars for domestic transactions will eliminate the existence of the multi-pricing system and charging of goods and services in foreign currency within the domestic economy.

In this regard, prices should remain at their current levels and or to start to decline in sympathy with the stability in the exchange rate given that the current monetary balances have not been changed. In this respect, the RBZ will commit all its efforts to use the instruments at its disposal to maintain stability of the exchange rate.

The Bank has arranged sufficient lines of credit to enable it to maintain adequate foreign currency to underpin the foreign exchange market. This is essential to restore the purchasing power of RTGS balances through safeguarding price stability emanating from the pass-through effects of exchange rate movements.

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