HARARE – The ZWL’s downward spiral continues, inching towards the 20 000 mark against the USD on the interbank market as policy vacuum sees companies scramble for USD currency from the banks amid worsening lack of confidence in the local unit of transaction.
The ZWL traded at 19 825.9982 against the USD this morning, reflecting a 68.8% decline since 2 January 2024.
On the ZSE, market capitalization breached the $50 trillion mark for the first time since the reintroduction of the local currency in 2019 as investors rush to dispose of excess ZWL balances on the bourse to hedge against further loss of value.
By the close of yesterday’s trading, the ZSE market capitalization at $58.59 trillion, translates to US$ 2.96 billion in real terms.
Authorities have delayed issuing the Monetary Policy Statement that was meant to provide policy direction in terms of interest rates and inflation expectations.
The situation is further complicated by the hint of the introduction of a structured currency which has created uncertainties over the future of the current ZWL regime.
On the parallel market the ZWL is now trading anywhere between the 20 000- 25 000 band, raising fears of aggravated inflation.
Bankers Association of Zimbabwe president Lawrence Kazemba told Finx; “There are some concerns about the volatility of the local currency which I believe will largely be dealt with in the monetary policy measures which are expected soon.”
But with no specific details as to when the MPS will be issued, the more anxious economic actors remain.
Zimbabwe faces a difficult task of building strong reserves to meet its external obligations due to the anticipated decline in foreign currency earnings from tobacco, following a bad season owing to drought.
Furthermore, the continued decline in global mineral prices will also hit hard on foreign currency generation with key minerals such as platinum, diamond and gold affected.
Already some big mining houses have felt the heat, with Zimplats this week announcing a voluntary job cut exercise following in the footsteps of Mimosa which also shed jobs earlier this month citing depressed earnings.
Zimplats recently posted a US$8.8 million loss, the first loss in almost a decade for the company, as softening platinum prices took a toll. This is a massive blow to Zimbabwe’s debt clearance program for the Afreximbank US$ 400 debt which was meant to be cleared from 35% of the company’s export proceeds.
