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Monday, January 30, 2023
HomeBusinessZim dollar Crumbles Amid Fears Of Crash

Zim dollar Crumbles Amid Fears Of Crash

The Zimbabwe dollar (ZWL) depreciated by 2.71 percent to ZWL% 159.35 against the American dollar (USD) in today’s RBZ auction and more is now approaching the ZWL$ 400 mark on the parallel market, trading around ZWL$ 380 cementing fears of an imminent crash.

Government has failed to stabilise the local currency since its reintroduction some three years ago despite introducing a foreign currency auction system to establish its market driven price.

Parallel market rate have ran amok in the past few weeks and as of today, the Zimbabwe dollar was trading around the ZWL$ 350-380 band.

The difference between the RBZ established rate and that of parallel market has widened even further at 138 percent.

Analysts had earlier predicted that the ZWL would at least reach ZWL$ 400 by mid-year but its erosion has occurred at fast speed.

Last week, President Emmerson Mngangagwa said his administration was working flat out to strengthen the ailing ZWL which was under threat from currency manipulators.

In response, the RBZ suspended Metbank Limited from operating as an authorised dealer pending full investigations for breach of Exchange Control regulations relating to trading in foreign currency.

It also suspended Rolink Finance (Private) Limited from operating as a bureau de change for breaches of the Exchange Control (Authorised Dealers with Limited Authority) Order, Statutory Instrument 104 of 2015 and Exchange Control Circular Number 2 of 2021 issued to Authorised Dealers with Limited Authority (ADLAs).

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It further castigated the industry lobby body, Confederation of Zimbabwe Industries (CZI) for its paper suggesting the country was now in a mono-currency anchored by the USD.

However analysts, including Norton legislator, Temba Mliswa criticised RBZ and the government for failing to instil confidence in the currency.

“The fickle local ZWL is just a bond note by another name. The idea behind the managed currency auction system is to surreptitiously support and prop up this surrogate currency. This has dismally failed,” Mliswa wrote

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