The Reserve Bank of Zimbabwe Governor Dr John Mangudya has slammed businesses for wantonly raising prices of basic commodities based on the movement of the exchange rate saying it was not a significant factor to determine value of a product.
Dr Mangudya said businesses were exaggerating the effect of exchange rate in determining prices of goods and services. He said this while giving oral evidence before a Parliamentary portfolio committee on Information Communication Technology and Courier Services chaired by Kuwadzana East legislator, Mr Charlton Hwende (MDC Alliance.)
"Let me remove the myth about exchange rate. Not all the cost of production come from foreign currency. Sometimes in a product, maybe the import component is 10 percent, or 15 or 20 percent. You cannot use an exchange rate for determining the price of a product everyday. You do not need to track the exchange rate on a daily basis. If your cost of production is 20 percent foreign currency, I think it would be wrong to use exchange rate as a price determining factor, which I see in Zimbabwe," said Dr Mangudya.
He said several other countries' exchange rate would constantly move but prices would remain static.
More to follow...