Fuel Now Officially Cheaper In US Dollars Than Zimbabwe Dollars

Fuel Now Officially Cheaper In US Dollars Than Zimbabwe Dollars- iHarare

Fuel Now Officially Cheaper In US Dollars Than Zimbabwe Dollars

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Zimbabwe Forex exchange auction trading system

Fuel in Zimbabwe is now surprisingly cheaper in United States dollars compared to that priced in Zimbabwean dollars.

A litre of petrol is retailing at an average $97 against the domestic currency’s trading range of $81 to the United States dollar at the Reserve Bank of Zimbabwe (RBZ)’s weekly auctions and $90 on the black market.

A weighted or blended price of the commodity (at US$1,19 per unit) using the current rates means local cash fuel is “slightly expensive”, thus spawning a massive phenomenon where motorists prefer to use foreign currency to purchase fuel.

Besides the exchange rate considerations, the trend is probably being fueled by the fact that it has become so cumbersome to use the Zimbabwe dollar due to daily transaction limits or restrictions — and the pricing chatter has also arisen due to the scrapping of subsidies on the key product.

Zimbabwe Energy and Regulatory Authority acting chief executive Eddington Mazambani told The Finacial Gazette that they are doing their best to deliver a fairly-priced commodity for the sustenance of the economy and other long-term benefits such as low inflation.

He said:

When we announced prices on September 05, we considered the ruling exchange rate. If you check our notice (dealers with a) trading advantage can sell at a lower price, ours (the price) is just a cap, to say you cannot sell at a price higher than this.

RBZ advisor Eddie Cross however said the prices in foreign currency were way expensive compared to those being charged in the region despite the fact that John Mangudya’s auctions had already guaranteed a steady supply of currency.

Cross said:

We need a more market-driven system, with dealers buying their fuel with funds from the auction,” he said, adding he expected August and September’s inflation figures to be very low.It is sustainable (and achievable) if we maintain t he current policies… (and l can safely say) the informal sector rates now represents a minority of transactions, and neither dominant nor representative.

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