Sentiment in the market is at its lowest in as many months following a dramatic plunge of the Zimbabwean dollar (ZWL$) this week as the currency depreciated 30 percent in just four days.
As of Monday, the local unit was valued at an average of ZWL$ 15 against the USD, but as of this morning it has surpassed the ZWL$ 20 mark with indications pointing to a high possibility of a further drop in value.
Retailers and other various market participants have found it tough to align prices with the developments.
A snap survey by 263ChatBusiness revealed that some businesses in down-town Harare CBD have closed trading to avoid losses.
The ones trading have since made sharp price adjustments to sustain operations.
“We are assessing the situation, but currently we haven’t opened shop as yet because we may run the risk of failing to replenish our stocks. Most of it is imported so I can’t risk,” said one trader who owns a small whole sale.
Government is struggling to stabilize the ZWL$ which was re-introduced in February this year.
Since then, the unit has devalued by over 600 percent in less than eight months spiraling inflation to above 500 percent.
Despite the abolishment of the multi-currency system, the USD has however remained the comparative unit for pricing using the ZWL$ in the domestic market.
Monetary authorities say the recent devaluation of the ZWL$ is a result of the end of the tobacco marketing season that had seen an improvement in foreign currency for the country.
“The movements of the exchange rate are a reflection of the fact that we have come to the end of the tobacco marketing season. This country relies on four commodities for foreign currency — gold, tobacco chrome and platinum — and between February to the end of August or early September we had all the four but at the end of August we had only three, so the amount of foreign currency has declined and these movements are a reflection of that,” deputy governor at the Reserve Bank of Zimbabwe, Kupukile Mlambo told legislators earlier this week.
Zimbabwe is also battling serious cash shortages of its own currency coupled by critical levels of foreign reserves to sustain imported essentials such as fuel, medicines and electricity.
Market analysts have already pointed to a negative growth by end of year as economic indicators remain gloomy.