
Commodity prices may rise leading to shortages following last week’s devaluation of Zimbabwe gold (ZiG) by the Reserve Bank of Zimbabwe, according to bankers.
Newsday reported that the warning issued by the Bankers Association (BAZ) was contained in a leaked internal document containing issues discussed when its constituents met Fed Governor John Mushayavanhu on Tuesday this week.
“If market conditions remain unfavorable, such as high inflation, low investor confidence or trade imbalances, the value of ZiG will decline rapidly. This could lead to higher import costs and inflationary pressures on goods priced in foreign currency. There is a need to ensure enough foreign exchange to meet Demand can be reduced by reducing the creation of domestic currency.
“If the exchange rate weakens significantly, it could lead to higher prices for imported goods, leading to higher inflation in an economy already suffering from price instability.”