Zimbabwe’s contracting group, Masimba Holdings Limited has blamed the black market for the inflation that happened as 2018 went to an end.
The year on year inflation rose to 16,44% in October 2018 and by last November it had gained by 10,16 percentage points to 31,01 percent.
“The operating environment remained constrained mainly due to the continued shortages of foreign currency in the formal market. Consequently, there was increased activity in the black market as companies procured foreign currency at very high premiums which reportedly peaked at about 600% in November 2018.”Masimba Holdings Chairman Gregory Sebborn said.
“The exorbitant pricing of foreign currency regrettably pushed inflation to unprecedented levels that were last recorded prior to the adoption of the multi-currency regime. The inflationary pressures had an adverse impact on current and US$ US$ potential projects resulting in significant business slowdown particularly in the last quarter of the year.”
The Masimba Holdings Chairman also revealed that the Reserve Bank of Zimbabwe’s 1:1 US Dollar to Zimbabwe RTGS stance created some distortions last year.
“While the Real Time Gross Settlement (RTGS) balances officially remained at par to the United States Dollar (US$) in the period, the prevalence of inflation as alluded… created varying distortions on the purchasing power of the RTGS balances and US$,” Sebborn said.
“In addition, the RBZ officially separated the exporters NOSTRO FCA ( Nostro FCA US$) from the RTGS FCA (RTGS$) on 1 October. These balances were at law to be maintained in separate accounts with effect from the same date.”
“The ‘exchange rate’ between the RTGS$ and Nostro FCA US$ ranged between 3 to 5 in December 2018,” Sebborn explained.
Zimbabwe, this year, added the RTGS$ into the currency marketing thereby abandoning its 1:1 US$ to RTGS rate.
The new exchange rate, however, has led to the devaluation of the RTGS$ to 1:3 with the US Dollar.