Reserve Bank of Zimbabwe (RBZ)’s move to fully liberalize the inter-bank foreign exchange market starting on the 21st of May under a willing buyer-willing seller concept which allowed sellers to approach authorized dealers or Bureau de Change selling at an exchange rate the seller is willing to sell at has been met with a brutal market price reaction, 263Chat Business can reveal.
Most notable was a steep increase in the price of fuel yesterday at selected fuel filling stations in Harare, where a litre of petrol now sells at RTGS $ 7. 90 from RTGS $ 4.90 revised barely a week ago.
This has seen commuter omnibus fares soaring to an average of $ 3 per trip from most suburbs in the city into CBD with places such as Chitungwiza and Ruwa charged between $ 4 and $ 5 RTGS.
Sources in the fuel industry told this publication that the spike in fuel prices at most service stations was a reaction to the RBZ strategy which has officially conceded the parallel market rate as a point of reference.
“What you are seeing is a reaction to what RBZ did. They liberalized the interbank market to sell and buy foreign currency at a rate of the seller’s choice and this implies that the premium rate on the parallel market is the preferred choice hence what we have done in the fuel sector is to sell a liter of fuel at US $ 1.10 then simply translated to the parallel market rate of the day, we are selling at RTGS $ 7.90,” said the source.
Energy regulator, Zimbabwe Energy Regulatory Authority (ZERA) issued a statement in response to the development distancing itself from the price hikes.
“The Zimbabwe Energy Regulatory Authority (ZERA) would like to advise the public and stakeholders that current fuel prices of RTGS $ 4.89 and RTGS $ 4.97 for diesel and blend respectively shall continue to prevail. This position takes into account the funding arrangement of importation of fuel through Letters of Credit (LCs) which were established at the exchange rate of RTGS $ 4.6125,” read the statement.
This was followed by a post Cabinet meeting statement that issued a stern warning to fuel dealers yesterday late afternoon.
““That is unacceptable. It’s causing extreme inconvenience (to citizens). We think that it is simply selfish people who are deciding that they want to take this manner of dealing in fuel. If the practice continues, we will have to take serious remedial measures because we cannot accept the level of inconvenience that the public is being exposed to.” Energy and Power Development Minister Advocate Fortune Chasi said.
However, analysts have warned the government against any form of controls citing this would lead to shortages of commodities on the market.
Already, the food retail sector has also taken a similar route, basing their prices on the parallel market exchange rate of the day.
