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Zimbabwe’s dollar risks collapsing, business lobby says

Unless the authorities implement policy measures needed to support it.
Image: Waldo Swiegers/Bloomberg

Zimbabwe’s currency faces collapse unless the authorities implement policy measures needed to support it, the country’s main business lobby group said.

Instability in the foreign-exchange market is being driven by an unrelenting increase in money supply, increasing imports and long delays in settlement at the central bank’s weekly currency auction, the Chamber of Zimbabwe Industries said in a statement.

“We find ourselves in a situation that could and should have been avoided had the appropriate policy prescriptions been in place,” the chamber said. “We are of course concerned about the response by the authorities so far, which was to blame players in the foreign currency markets as the sole cause of the currency instability.”

Delays at the central bank auction are forcing Zimbabwean companies to source their foreign exchange on the illegal parallel market. That’s resulted in the spread between the official and black-market rates more than doubling in recent weeks.

“This instability in the currency has prompted an aggressive administrative response from the authorities that, if continued, will send the economy into a hyper-inflationary tailspin,” it said. The Zimbabwean dollar is “in real peril and urgent and well considered policy measures must be implement by the authorities.”

The official rate has weakened 7.6% so far this year to 88.55 per US dollar, according to data collected by Bloomberg. It trades at 176 per US dollar on the parallel market, according to marketwatch.co.zw, a website that tracks black-market rates.

Declines in the parallel-market rate often lead to price hikes in the southern African nation, where annual inflation was 52% in September.

In 2008 the currency plunged and a bout of hyperinflation decimated savings and resulted in shortages. The currency was scrapped early the next year and the use of foreign currencies was legalised. The Zimbabwe dollar was only reintroduced in 2019

The central bank said Monday it reached agreement with businesses and government ministries on ways to address volatility in the illegal parallel market, which business increasingly is using as an alternative to the auction system to source foreign exchange.

Steps to be taken include reviewing bank policy rates to curb speculative borrowing, tightening money supply and government support for the auction system, the bank said in a statement.

© 2021 Bloomberg

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But, fortunately, because they have all the land, Zimbabwe is a veritable paradise for all who live in it.

Exactly – they have all the land they want but no economy. That is excatly what will happen if SA follows ANC/EFF policies!

And they are all Millionaires in Zim Dollars : Paradise

I think they should go back to their pre-colonial currency which was ehm aaahm erm …twigs?

me rather thinks they lived by the sword if you take into account how they behave in modern society?

Lets see next election who “The People” vote for??

At present this is exactly what they want. They voted for this FOR $%^& DECADES NOW!!! Never hear any complaints from “The People”??

So why should “others” be concerned about it??

TSK!!!

those zims that remember rue the day Smith was ousted…with a lot of help from the UK. The pommies should hang their heads in shame and Wilson was the biggest traitor.

I am quite sure the much vaunted Finacial Intelligence Unit is all over this one, so we can all relax. As far as “tightening the money supply” is concerned, dream on. They have no alternative to printing money because no one in their right mind will lend this crowd any more money and that includes neocolonialist China; even they have finally given up. The national wealth has been squandered, its all gone. So now Zimbos are all equal: equally miserable, equally poor (except the politicians) and equally hopeless. Coming to a country near you, soon.

MORE OF THE SAME -CHASE THE THE WHITE MAN AWAY THEN FOLLOW HIM TO EUROPE
IF IT WAS NOT SO SAD IT WOULD BE HILARIOUS
KEEP BLAMING EVERYBODY ELSE FOR YOUR SHORTCOMINGS

End of comments.

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