The head of Zimbabwe's central bank denied on Thursday that it had fixed the exchange rate of the country's new transitional currency, whose value it said it would let the market decide. Zimbabwe ditched a discredited 1:1 dollar peg for its dollar-surrogate bond notes and electronic dollars on Feb 20, merging them into a transitional currency called the RTGS dollar.
The value of that currency, which authorities said they would float, has held unchanged at 2.5 to the US dollar since Feb. 22. The country's economy has been crippled by a cash crunch and plans to allow ordinary Zimbabweans to exchange bond notes and electronic dollars for US dollars at banks have yet to be implemented. On the black market, the RTGS rate was 3.8 to the dollar on Thursday, compared to 3.5 last week.
Concerns that the government is resisting moves to allow a further devaluation of the RTGS dollar has discouraged those holding US dollars from selling them at the prevailing rate. "We have not fixed the exchange rate and we will not fix it," Central Bank Governor John Mangudya told a parliamentary committee. Ministry of finance secretary George Guvamatanga saw room for a further RTGS dollar devaluation, which he said the market would determine.
He told the committee that volumes traded on the black market were thin and that if rates on the forex inter-bank market rose too high, very few businesses could afford to buy dollars.