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Mthuli Ncube offers to teach Biti a lesson on exchange rates

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  • Professor Ncube has denied rigging the exchange rate at the auction floor and invited Biti to a free lesson on how an open auction operates.

By Mutsa Makuvaza

FORMER Finance Minister Tendai Biti yesterday drew the ire of incumbent Professor Mthuli Ncube in Parliament when he suggested that the Reserve Bank of Zimbabwe (RBZ) was rigging foreign currency exchange rates at the auction system to create a false sense of economic stability.

Professor Ncube blew his top when the MDC Alliance vice president said the Treasury chief was choosing to stay in his own track and refusing to fully liberalize the exchange rate so that the Zimbabwe dollar “finds its own mark” in the market.

The debate started when MDC Alliance MP for Harare North, Allan Norman Markham, said tobacco farmers will be prejudiced when the auction floors open because while they get paid at an official exchange rate of 83:1, they lose value as they buy farming inputs at a black market exchange rate of 125:1.

Biti, who served as Finance Minister from 2009 to 2013 in the national unity government, demanded that Treasury ensures there be some parity between the exchange rate used for paying the farmer and what the goods are costing the farmer on the open market.

Directing his question to Mthuli Ncube, Biti said: “Why do you not do the right thing esteemed Minister and accept the informal re-dollarisation that has taken place? 

“For you to remain within your track, why do you not simply liberalize the exchange and let the Zimbabwean dollar find its mark on the open market instead of having the artificial controlled exchange rate of 1:83 which is prejudicing the market, farmers and the rest of the economy?”

Professor Ncube denied rigging the exchange rate at the auction floor and invited Biti to a free lesson on how an open auction operates.

“The auction system is not rigged, fixed, or manipulated,” said the Finance Minister.  “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 United States dollar at 1:1000 it is up to you. We will actually sell to you to teach you a lesson. If you want, I will come to that… So you choose your exchange rate.

“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.”

Professor Ncube argued that for the first time in a long period, the exchange rates had stabilised and even businesses can testify that it was now possible to plan ahead.

“The weighted average has been stable and I tell you this economy, industrialists and the Hon. Biti appreciate that.  He appreciates the stability I can assure you because the money in his pocket right now in Zimbabwean dollars or RTGS, whatever he is calling it, is stable, it is retaining value. 

“For the first time in three years, companies can plan. Speak to the companies and that is what they will tell you.”

Professor Ncube explained that the auction system represents a market oriented choice and it has so far delivered stability.

“We cannot adopt anything else that undermines that stability such as this other market that Honourable Biti is referring to. No, we cannot do that. 

“We have to stick to the auction rate.  That is what has delivered order and stability. The auction system is driven by free market forces because you can choose any exchange rate you want. 

“You cannot be freer than that. Can you imagine a system where you choose your own price? That is the ultimate in free market forces promotion,” said the Finance Minister.

Biti and Ncube have previously clashed multiple times in Parliament.

Meanwhile, Professor Ncube in response to another question relating to tobacco farmers said Government would never pay using any other exchange rate apart from the auction rate as that would be disruptive.

“We cannot offer any other exchange rate.  If we did that, then we will be undermining the auction system and we will be promoting these other markets for which we have no control which also have shown to be quite disruptive,” he said. – Zimbabwe Voice 🔺

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