ber year-on-year inflation raced to 1,070.2 percent, up from 1,023.3 percent in September.
Finance Ministry sources said the exchange rate of the Zimbabwe dollar against the US currency would be depreciated from the current fixed Z$250 to one greenback to about $750 as part of efforts by Murerwa to smash a thriving parallel market that has exacerbated a hard cash crisis gripping Zimbabwe.
Mugabe and his Cabinet, fearing that a devaluation will trigger price increases across an economy in crisis, have staunchly resisted calls by Murerwa, economists and business to devalue the local dollar in line with its purchasing parity since mid year.
The parallel market, itself just one of the distortions arising from years of poor fiscal management by the government, is trading one American dollar at between Z$1,600 to 1,800.
The sources said Murerwa had finally convinced his Cabinet colleagues that a devaluation of the Zimbabwe dollar could help partly ease the pressure on the parallel market, where rates once reached 1,800 local dollars against the American unit before tumbling in the past week because of increased hard currency inflows ahead of the forthcoming Christmas holiday.
The sources said Reserve Bank of Zimbabwe (RBZ) governor Gideon Gono had also lately joined Murerwa in calling for a devaluation of the Zimbabwe dollar following a meeting late last month between himself and representatives of the airline industry.
The airlines had petitioned the RBZ following a directive by the government to ban the use of parallel market rates in companies’ pricing policies.
“The Reserve Bank had recommended a devaluation to 1,000 against the US dollar but the Cabinet has settled on 750 to the US unit,” another source said.
Post published in: Economy