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My inbox is teeming with followers messages asking for a simpler explanation to what has happened to the Zim Dollar and the US Dollar.
Here we go;
If you are a tomato exporter in Zimbabwe called Jakarasi Tomatoes.
You export tomatoes worth US$100 to Zambia.
The law says you will get 75% of your payment from Zambia at the RBZ in US Dollars, and 25% in Zim Dollars at the prevailing Auction rate.
When the payment comes from Zambia, you get the 75% in US Dollars (US$75) but the RBZ withholds your Zim Dollar component worth (US$25).
It means that you only have US Dollars but No Zim Dollars.
You then pay your workers in US Dollars from your Zambia sale, and they too buy tomatoes from you in US Dollars locally, and they buy other things from other retailers in those US Dollars from their salaries.
When they go to the hospital they pay in those dollars because that is what they have, they pay their Kombi fee in those US Dollars too!
It means the economy has dollarised.
When the RBZ Dutch Auction comes on Tuesday, will there be any need for Jakarasi Tomatoes to go and buy forex when it has no Zim Dollars, and now has forex from the Zambia sale, and its local customers who are now paying in Zim Dollars?
This is what has happened to the Zimbabwean Dollar, it hasn’t strengthened through an open market system, it has been manipulated by withholding it.
That is why you hear people saying;
“Zim Dollar harisi kubatik,” or “I-Zim dollar ayitholakali.”
The RBZ is withholding the Zim Dollar from exporters to be paid at a future date indexed to the auction rate, effectively creating a Zim dollar backlog.
My view is that this backlog will be dealt with after the elections if ZANUPF wins or rigs.
ZANUPF wants to cross the river before the bridge is washed by the economy, it hopes that the bridge will be washed after the election.
So for now the US Dollar will be the functional currency regardless of the noises made by Government propagandists!
End of story! @daddyhope