Parallel Exchange Rate Fluctuations and Commodity Pricing in Zimbabwe: Who really controls commodity pricing?
Abstract
This study employs a quantitative, causal-comparative research design to urgently explore the relationship between the parallel exchange rate (black market rate) and the pricing behavior of basic commodities in Zimbabwe. The pressing need to determine how fluctuations in the parallel exchange rate affect retailers’ and wholesalers’ pricing decisions while accounting for external factors such as inflation, supply chain disruptions, and government policies is evident. This study employs a quantitative, causal-comparative research design to investigate the relationship between parallel exchange rate fluctuations and the pricing of basic commodities in Zimbabwe. Structured surveys were conducted with 200–300 retailers and wholesalers across formal and informal markets, supplemented by secondary data on exchange rates, commodity prices, and macroeconomic indicators. Data were analyzed using descriptive statistics and ordinary least squares regression. The results reveal a strong and statistically significant relationship between the parallel exchange rate and commodity pricing (R = 0.773, R² = 0.654, p < 0.001), with a one-unit increase in the parallel rate associated with a 0.186-unit rise in commodity prices. The findings highlight that businesses, particularly in the informal sector, frequently adjust prices in response to currency depreciation, reinforcing cost-push inflationary trends. The study concludes that Zimbabwe’s heavy reliance on the parallel market significantly influences commodity pricing and contributes to inflation. It recommends inflation-targeting monetary policies, strengthened fiscal discipline, enhanced foreign currency availability through formal channels, and targeted price stabilization measures to mitigate volatility and protect consumer welfare. The results provide actionable insights for policymakers, businesses, and consumer advocacy groups in addressing exchange rate–induced pricing instability.
Keywords: Black-market, Commodity, Exchange Rate, Inflation, Parallel, Price
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