CONFEDERATION of Zimbabwe Industries (CZI) says the US$ shortages on the official market risk undermining the ZiG currency on the back of calls for deeper reforms to salvage the struggling local unit.
The analysis comes on the back of spiralling parallel market exchange rates which are now hovering above US$1: ZiG 22. Markets have swiftly responded to the shocks triggering a new wave of inflationary pressures while in the process slowly threatening the local unit's viability if combative measures are not timeously put in place.
While authorities have assured the public that the carnage will soon be eased, an industry lobby group contends that critical shortages of foreign currency on the official markets pose a threat to ZiG acceptability.
"Some companies are struggling to obtain foreign exchange on the official market. This will likely undermine the acceptability and wide use of ZiG. On the 25th of July 2024 the RBZ announced that there has been a build-up in pipeline demand for foreign currency at banks, thus putting undue pressure on the foreign exchange market," said CZI.
The Industrialists also contend that despite the introduction of the new ZiG currency, the economy is still largely dollarized.
Recently, leading sugar producer, Hippo Valley Estates bemoaned currency which has seen the company experiencing a mismatch between the ZWG and US$ on revenues and expenditures whereas the currency mix on revenues is currently showing an increase of ZiG-denominated sales at a time when suppliers of raw materials are rejecting the local unit in favour of the US$.
The business community has since raised concerns over the lack of foreign currency on the Interbank Market because the government is the only willing seller of foreign currency.
Some Analysts believe the decision to shut down the Foreign Exchange Auction System which had served as an avenue for foreign currency access to companies with pressing needs has been a huge blow to local currency stability as it leaves US$-seeking entities with no choice except to participate in the parallel market.
