As we look at the Zimbabwe Consumer Price Index Month-on-Month which measures the overall change in consumer prices based on a representative basket of goods and services over time, it increased drastically with 74.50% in June of 2023 over the previous month, May of 2023. The RBZ on June 6 raised its key lending rate by 10% points to 150%, in a bid to tame inflation and protect the country`s weakening currency. It also announced that the central bank will begin selling foreign currency at market-determined exchange rates through banks, but stopped short of allowing the Zimbabwe dollar to float freely. The Zimbabwean Annual Consumer Price Inflation skyrocketed to 175% in June 2023, up from 86.5% in the prior month marking a continued deviation from the downward trend observed since the beginning of the year. 

Currently, the local currency is scarce in the market, thereby continuing to make the Zimbabwean dollar gain value over the US dollar. As of 11 July 2023, the local currency appreciated by 5.05% making it ZWL$ 4,998.8352 from ZWL$ 5,251.0640 it was as of 4 July 2023. As the Zimbabwean dollar continues to firm against the US dollar, there is a noticeable decline in fuel prices. Presently, the blend depreciated in value pricing by 2.55% and is now selling at US$1,57 from the US$1.61 it was being sold at as of 08 April 2023.

Due to this unexpected gain of the local currency over the US dollar for the past weeks, there might be a positive shift in demand and supply of goods in the country. According to the International Monetary Fund, in the goods market, a positive shock to the exchange rate of the domestic currency(an unexpected appreciation) will make exports more expensive and imports less expensive. As a result, the competition from foreign markets will decrease the demand for domestic products, decreasing domestic output and price.  Also the appreciation of the domestic currency will stimulate economic activity through the initial decrease in the price of goods of foreign goods relative to home goods.