Informal Sector Not Responsible For "Ridiculous" Forex Rate - Mangudya
Reserve Bank of Zimbabwe (RBZ) Governor John Mangudya says the informal sector is not responsible for pushing the forex rate as informal sector transactions account for only 5% of total payments.
Zimbabwe’s annual inflation rate hits a record low since 2019 this month, falling to 56.37 per cent from 106.6 per cent in June.
Speaking during an interview with State media, Mangudya said that the direction of the exchange rate will, going forward, be influenced by key economic fundamentals, both internal and exogenous. He said:
Go to Mbare Musika (Market) today and buy say bananas, what (exchange) rate are they using, $110-$120/US$1, so they (informal sector) are not the ones driving the parallel market rate increases.
They depend on the formal sector. What do they sell in the informal sector, cooking oil, sugar, milk?
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Have you ever seen the informal sector producing goods? They (informal sector) mostly sell finished products.
Those people do not use rates that are ridiculous as is the case with the formal sector, they are very few.
The problem is from oligopolies and monopolies, that is why we came up with SI 127, to deal with outliers.
Mangudya said this is a time for Zimbabweans to celebrate as the annual rate of inflation went down from 837.5 per cent in July last year to 56 per cent in a year’s time. He said:
It is a record that has not happened anywhere. So, we need to continue (on the current trajectory) and as the central bank governor, the question is ‘How do we anchor inflation expectations?
The RBZ Governor projects inflation to fall further to between 20 and 30 per cent by December on account of the international commodity price boom, growth in exports and the bumper harvest, among other things.
