A report by two separate commissions said the Zimbabwe dollar was overvalued and urged the government to loosen foreign currency controls and allow market forces to determine the exchange rate.

The Competition and Tariff Commission and National Competitiveness Commission said in a joint report on the prices of basic goods and services that the market should set both the exchange rate and prices. The Zimbabwe dollar has slumped 22% in the past ten days to 1 414 to the US dollar.

“This measure is unlikely to lead to increases in prices as manufacturers’ prices are pegged in US dollars and indexed to the parallel market,” the two commissions said Tuesday in an emailed report.

The southern African nation has been battling a wave of price hikes on basic good and services. Earlier this month, the cabinet announced that it will set up a separate team to investigate the increases, which retailers have blamed on the depreciation of the local currency. The Zimbabwe dollar has lost more than half of its value this year. The results of the cabinet investigation are yet to be made public.

The report by the two commissions is at odds with Zimbabwe President Emmerson Mnangagwa, who this week blamed business for the latest economic turmoil. Mnangagwa said on Sunday his government is prepared to take “painful” measures to fix the economy.

© 2023 Bloomberg

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