Finance and Economic Development Minister Mthuli Ncube has said the Zimbabwe dollar is in short supply and its value is being distorted by speculative behaviour.
Ncube made the remarks during a question-and-answer session at the weekly post-Cabinet media briefing in Harare on Tuesday. He said:
The Zimbabwean dollar is in short supply. If you got 0% growth in the money supply, then this currency is not in abundance, but actually in short supply.
So, what is driving the exchange rate is speculative behaviour in some of the monopolies.
Ncube refuted claims made by former Finance Minister Tendai Biti last week that the Government was printing money to fund infrastructure development projects. Said Ncube:
The government has taken steps to make sure that in its financing of necessary infrastructure development, it does not contribute to exchange rate volatility, indeed, to inflation acceleration.
We have taken two critical steps. One is to pay contractors using the foreign formula, 50% in US dollars and 50% in Zimbabwe dollars.
We have taken those actions and we have a committee between Treasury and the central bank which is called the liquidity committee, which manages the liquidity situation in the entire economy.
Last week the Zimbabwe National Statistical Agency (ZimStat) announced that the country’s year-on-year inflation had shot to 131.7% up from 96.4% in April.
Meanwhile, the official exchange rate, as announced by the Reserve Bank of Zimbabwe (RBZ) on Tuesday, is now US$1:ZWL$308.