No benefit from rand depreciation for Zimbabweans

No benefit from rand depreciation for Zimbabweans
Published: 29 August 2013
ZIMBABWEAN consumers have not benefited from the rand fall against the US dollar as prices of goods and services remained largely unchanged despite the South African currency plunging 20 percent against the greenback this year.

The depreciation of the South African rand should ordinarily be good news to consumers in Zimbabwe as it translates into low prices.

This is particularly so because Zimbabwe uses the US dollar more as an official currency.

Hence, the fall in the rand results in importers using fewer dollars than before, thereby creating savings.

This is coupled by the fact that South Africa alone constitutes about 75 percent of Zimbabwe's import basket meaning that this favourable position in exchange rate is transmitted significantly into the pricing structure in the economy.

A survey in Harare showed prices have remained largely the same since the beginning of the year.

Some economic analysts said the retailers "might be profiteering" because, under normal circumstances, the effect of the depreciation of the rand against the dollar is supposed to be passed on to consumers in form of low prices.

"Prices have remained the same but the fall in rand against the rand should have resulted in marginal decline in prices of most commodities," said Gift Mugano, economic lecture at Port Elizabeth University in South Africa.

The South African rand is the weakest among emerging market currencies that saw significant drops in value against the green back.
- herald


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