The official exchange rate for Zimbabwe’s dollar fell 32% on Wednesday against the greenback, its biggest daily fall since the minister of finance announced last week that the country would adopt a “managed float” to fend off a currency crisis.
HARARE, March 18 (Reuters) – The official exchange rate for Zimbabwe’s dollar fell 32% on Wednesday against the greenback, its biggest daily fall since the minister of finance announced last week that the country would adopt a “managed float” to fend off a currency crisis.
Mthuli Ncube said Zimbabwe was abandoning strict control of foreign exchange by the central bank at a time when prices are soaring and the local currency is fast losing value on the black market. Annual inflation hit 540.16% last month.
The Zimbabwe dollar ZWL was trading at 24.3266 to the U.S. dollar from 18.4283 at the start of trade, according to Refinitiv data.
The fall moves the official rate substantially closer to the price on the black market, where it trades above 41 to the dollar.
Traders said the rate movement was the first step by the central bank in freeing currency trading, although banks were still struggling to get dollars to sell to clients amid a severe shortage of foreign exchange.
The central bank had sold dollars to the banks on Wednesday to fund fuel imports, a trader at one commercial bank said, a move that could still influence the exchange rate.
“Ultimately the rate will determine whether more money will flow into the official forex market,” the trader said.
Exporters in Zimbabwe are allowed to retain a portion of their sales with the central bank taking the rest, which it says is used to import medicines, electricity and fuel.
On Sunday, Zimbabwe suspended the transfer of local shares in dual-listed companies to foreign bourses, a form of transaction that had provided one of the main ways for citizens and businesses to obtain dollars.
(Reporting by MacDonald Dzirutwe Editing by Peter Graff)