The duty is yours to put 1 and 1 together as readers – and see the elephant in the room

By Ngoni Chihombori

The 23rd September edition of The Herald carried an article whose title I found to be interesting. The article was titled “ Who is causing parallel rate markets to spike?” What caught my attention particularly were the questions that this title evoked within my mind.

Was this supposed to be a rhetorical question, especially coming from a publication within the government-controlled media stable?

A few days earlier, within the same week of publication, while reading through the news, I read through another article reporting on an event at which the Vice-President, Retired General Constantino Chiwenga was supposedly quoted accusing some unnamed, invisible and, “mysterious” saboteurs clocking in double and triple shifts, just so to frustrate government efforts of stabilizing the economy through the manipulation of the parallel market currency rates.

What I am still battling to crack right now is that, assuming this question weren’t meant to be rhetorical, such a question coming from the government would have either of the following explanations. Perhaps the government is assuming that the audience for the message are economically illiterate dimwits and the authorities can get away with such cheap propaganda.

Or, the even much scarier alternative, the Government is actually posing a very sincere question, seeking genuine answers to such a nation-breaking mystery to which the leadership is working flat-out to bring about a sustainable solution.

Why I am more afraid of the latter is that it triggers serious questions surrounding the competence of those to whom the nation is outsourcing some very important decision-making authority and entrusting the future and that of the future generations who will have to bear the cost of such reckless decision-making.

In any case, I am going to indirectly try and answer the above-posed question; Who is causing parallel rate markets to spike? The duty is yours to put two and two together, and try open the eyes to see the very big, very fat and very ugly elephant in the room

While delivering a talk in India, in 1963, Milton Friedman once famously stated, “ Inflation is always and everywhere a monetary phenomenon.”



The same old wisdom held true on a historic day, almost seven decades ago, and the same wisdom still holds true today.

Perhaps passing time will prove me wrong, but my hypothesis is that the same wisdom is going to hold true in the foreseeable future under the current, centralised, conventional monetary systems of the 21st century.

The Reserve Bank of Zimbabwe (RBZ) recently released the July Monthly Economic Performance Report in which the latest Banking Sector statistics as of the end of the month of July were published.

As I always say, the numbers always have a story to tell, and unlike most among us, the numbers rarely lie.

As of the end of January, 2021, M3 (Broad Money Supply) which is the aggregate total amount of money supply in the whole economy stood at c.ZWL$ 220.48 billion.

As of the latest published July RBZ banking sector numbers, aggregate broad money supply stood at c.ZWL$ 330.66 billion. This represents a ZWL$ 110.18 billion (c.50%) increase in total money supply in the economy.

By the end of the month of January, the parallel market rate of the US$ against the Zim Dollar was around 100 units of the local currency per unit of the American Dollar. As of the end of July, the parallel market rate stood at roughly 150 units of the local currency against the greenback, representing a c.50% decline in the value of the local currency.




One doesn’t need an astronaut or to resurrect Adam Smith from the dead to come and explain that if you created 50% more money out of thin air, the exchange rate is bound to fall by roughly the same.

The central bank would most likely want to hide behind the pinky finger and argue that the FCA nostro component factor of M3 which is correlated to the official exchange rate is responsible for this expansion rather than money creation.

The same July statistics point to a c.ZWL 32.58 billion increase (from ZWL$108.59 to ZWL$141.17 billion) in Nostro FCA balances in the total banking sector.

This leaves a c.ZWL$ 80 billion increase in electronic Zim Dollars created, and this is only as of the end of July. Only the Lord knows where this figure stands today.

However, it is interesting to note that in spite of the 50% bloodbath witnessed on the currency markets, on the government-acclaimed “successful and super stable” casino, oops!

I meant, Forex Auction System run by the legendary Governor John Bond Mangundya aka Santa Claus, which is supposed to be the legitimate, “official” exchange rate, the local currency has only slipped by a mere 3.6% (82.68 units to 85.64 units) against the USD.



Unless perhaps, there is a matured top secret plantation with some ripe and ‘ready-to-harvest’ money trees, run by some mysterious saboteurs from which c.$ZWL 80 billion was plucked from and magically injected into the banking system.

As far as I am concerned, only one institution has the legal mandate to issue Zimbabwean Dollars and these troublesome delinquents, whose incessant quasi-fiscal activities are responsible for all this mayhem are frequently spotted strolling up and down the corridors of a very tall building at the intersection of Samora Machel Avenue and 1st Street, in the Harare CBD. Duh!


Ngoni Chihombori is an independent macroeconomic analyst based in Harare, Zimbabwe. He is reachable on



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