LEDRIZ calls for social contract as Zim$ depreciates

By Own Correspondent

THE Labour Economic Development Research Institute of Zimbabwe (LEDRIZ) has urged social partners to come up with a contract in a bid to safeguard any further ZWL depreciation.

 The black market rates are currently hovering between US$1: ZWL 1 700 as the generally accessible premium while those purchasing the greenback paid a high of US$1: ZWL2 200.

On the official foreign currency auction market the Zimbabwe dollar is pegged at US$1:ZWL1026.

The developments have left a section of the country’s working class which earns pure local currency in severe hardships.

LEDRIZ senior economist Prosper Chitambara said the current premiums are not sustainable but of course ultimately, money supply is the main cause of the depreciation underscoring those lessons drawn from the past shows that the factor has always driven exchange rate depreciation.

“ZWL liquidity has surged on account of a number of factors such as government’s payments to contractors, recent wave of salary increases in local currency. Due to the fact that we are not predominantly dollarized, recipients of such monies rush to the parallel market to exchange for US$ piling pressure on ZWL,” he said.

Chitambara said such liquidity triggers instability amid calls for the government to keep a tight lid on expenditure.

“In the short term it may however be difficult to tame the situation unless we urgently convene a social contract. It’s a difficult situation, we need to address the drivers of inflation, specifically money supply and indiscipline.

“In the long term efforts must be seriously invested towards addressing the informal economic challenge bedeviling the economy,” he said.

//ENDS//

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