CZI calls for willing-buyer-willing-seller transformation

30 Dec, 2022 - 00:12 0 Views
CZI calls for willing-buyer-willing-seller transformation CONFEDERATION of Zimbabwe Industries (CZI)

The Chronicle

Nqobile Bhebhe, Senior Business Reporter

THE Confederation of Zimbabwe Industries (CZI) has urged the Government to transform the willing-buyer-willing-seller market into a market-determined exchange rate to promote an enabling environment for businesses to operate in.
The largest industry lobby body says if the financial platform is adequately fine-tuned, has the potential to curtail the parallel market distortions through a market-determined exchange rate.

In its latest inflation and currency update, CZI said since the introduction of the willing-buyer-willing-seller (WBWS) platform in March this year, it has not yet fully transformed into a market platform with confidence from users.
“The WBWS must be market determined without intervention to fix the rate from authorities. Banks should canvas willing-sellers and willing-buyers every morning and determine a realistic reference rate for transactions to take place,” said the organisation.

Reserve Bank of Zimbabwe

“The WBWS has the potential of curtailing the parallel market if the exchange rate is market-determined. The depreciation of the local currency on the parallel market fuels inflation, regardless of whether the depreciation is due to market fundamentals or just sentiments,” it added.

The last official exchange trading for the year at the Reserve Bank of Zimbabwe’s auction system was held two weeks ago before closure for the festive season holiday and will open on 9 January 2023.
The willing-buyer-willing-seller market is, however, open throughout the holiday period. The willing-buyer-willing-seller system came into effect as one of the measures put in by the Government to arrest inflation.

The measure has been commended by the business community as it has partly contributed to stabilising the exchange rate by mopping up the excess liquidity, which has created a demand for the local currency.
In the last auction, the Reserve Bank of Zimbabwe (RBZ) allotted US$15,5 million to the auction system with US$14 million being allotted to the main auction and US$1,5 to small and medium enterprises.

As has been the tradition, the bulk of the foreign currency allotted was for procurement of raw material, which received US$7,9 million followed by equipment and machinery at US$2,4 million.
The business lobby group has commended the downward month-on-month inflation trajectory as a positive response to Government corrective measures.

The month-on-month inflation reached its peak in June 2022 at 30,7 percent and since then it has been gradually declining.
In November 2022, month-on-month inflation stood at 1,8 percent shedding 1,4 percentage points on the October rate of 3,2 percent.

“This generally shows that month-on-month inflation is now under control. At 1,8 percent, the month-on-month inflation rate for Zimbabwe is the second lowest since the adoption of the local currency in 2020, only coming out second to a rate of 1,6 percent recorded in April 2021.

“The continuous decline of month-on-month inflation to single-digit month-on-month inflation for the past three months entails relative price stability in the economy,” said CZI.

CZI has said that maintaining single-digit month-on-month inflation is possible as it is actually the norm for many countries.
To achieve the 2023 month-on-month targets, CZI has urged authorities to maintain the current policy mix.
“The authorities need to maintain the current policy mix in 2023, to achieve the month-on-month inflation set in the 2023 budget.”

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