Govt’s exchange rate is not rigged: Finance Minister

Finance and Economic Development Minister, Mthuli Ncube, has said the government’s auction-based foreign currency exchange rate, which has since the Zimbabwe dollar trading at around ZWL$83 for months against the United States dollar is neither rigged nor manipulated.

Ncube’s defence comes at a time when the parallel market rate used by some businesses has pegged the local currency at between ZWL$100 and ZWL$125 against the green back.

Responding to legislators in Parliament recently who implored him to do away with the auction system introduced in June last year to ensure people who do business with the government do not continue to be short-changed, Ncube denied that the system was fixed.

“First of all, let us be clear, the auction system is not fixed,” said Ncube. 

“The auction system only releases to the public as a communication point. The auction system is not rigged, fixed, or manipulated.  The auction system represents the best expression in choice.  You go there and you express whatever exchange rate you want.  It is up to you.  If you want to buy a United States dollar at 1:1000 it is up to you. We will actually sell to you to teach you a lesson, so you choose your exchange rate.”

He further explained: “That is why when we publish the results we show a range, from the highest to the lowest.  What we then communicate is the weighted average.  That is all.”

The weighted average exchange rate’s stability was being appreciated by industrialists.

“For the first time in three years, companies can plan,” said Ncube.

“Speak to the companies and that is what they will tell you. So the auction system represents a market oriented choice friendly and choice promoting system and it has delivered stability. So therefore we cannot adopt anything else that undermines that stability. No, we cannot do that.  We have to stick to the auction rate.  That is what has delivered order and stability.” The auction system, Ncube said, was driven by free market forces adding traders can choose any exchange rate they want.

“You cannot be freer than that.  Can you imagine a system where you choose your own price?” said Ncube. 

“Can you believe it?  You cannot be freer than that.  That is the ultimate in free market forces promotion.

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