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Zimbabwe Foreign Exchange Policy Moves Are Felt At The Gas Pump

The new regimen of preferential foreign exchange rates unveiled Thursday by Reserve Bank of Zimbabwe Governor Gideon Gono seems to be tightening supply in fuel markets as gasoline sellers withdraw supply until the impact in markets is clear.

Prices of gasoline and other imported commodities are highly sensitive to fluctuations in the currency exchange rate on the parallel market, economists noted, speculating that players in the black market in fuel want to be sure that their prices will cover the replacement cost of gasoline sold while maintaining their profit margins.

Motorists complain lines at gas pumps have gotten longer recently with prices ranging from Z$15,000 to Z$25,000 a liter vs. an official price of Z$445 dollars a liter. Local markets braced for a devaluation as soon as Gono's speech was announced.

The central bank established an effective exchange rate of Z$15,000 per U.S. dollar for exporting companies and for remittances from Zimbabweans abroad. But Gono insisted that the official rate of Z$250 per U.S. dollar remained in place.

Economic consultant Daniel Ndlela told reporter Caroline Gombakomba of VOA's Studio 7 for Zimbabwe that tightness in local fuel markets could continue until early next week when the response to Gono’s sectoral devaluation is evident.

More reports from VOA's Studio 7 for Zimbabwe...