Much optimism greeted Zimbabwe Reserve Bank governor John Mangudya’s announcement last month that the bank would be abandoning its fixed exchange rate and policy of parity between the local currency and the US dollar. Instead, it would move to a managed interbank floating system on a willing-buyer, willing-seller basis. The move was hailed as a step in the right direction for the beleaguered economy. Immediately after Mangudya’s announcement Harare-based economist Ashok Chakravarti praised the governor and predicted the imminent demise of the parallel foreign exchange market. But a month on, Mangudya’s move has yet to yield any meaningful benefits, and the optimism has faded. If anything, it has become clear that the central bank is reluctant to really free the exchange rate. And there are fears that the bank will again arbitrarily raid foreign exchange accounts to pay for imports (it admitted to taking millions of dollars from foreign currency accounts prior to the adoption of the ...

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