Source: Zimdollar drops 135,7% – NewsDay Zimbabwe October 4, 2019
BY MISHMA CHAKANYUKA
THE Zimdollar has devalued by 135,7% to $15,25 against the greenback on the interbank market since it was declared the sole legal tender on June 24, owing to persistent foreign currency shortages and the deteriorating economic environment.
When the Reserve Bank of Zimbabwe scrapped the use of a basket of other foreign currencies, the Zimdollar was trading at US$1:2,5, but as of yesterday, the interbank rate stood at US$1:$15,25.
The interbank foreign exchange market was introduced in February this year to allow companies to trade forex, but access to foreign currency has remained challenging for businesses.
On the parallel market, the local currency was trading at 1:$17 against the greenback, a testimony of serious hard currency scarcities battering the economy.
This comes after the International Monetary Fund team which was in the country for the Article IV Consultation that coincided with the first review of the Staff-Monitored Programme last month told authorities that there was need to contain fiscal spending consistent with non-inflationary financing, tighten monetary policy to stabilise the exchange rate and start rebuilding confidence in the national currency.
The Washington-based Bretton Wood institution noted that weakening confidence, policy uncertainty, a continuation of foreign exchange market distortions and a recent expansionary monetary stance has increased pressure on the exchange rate.
Economist John Robertson said the country should increase its exports to generate more foreign currency and have an increased ability to create its own money.
“We need to increase our exports by increasing production in order to earn more foreign currency and reduce our imports. We also need to increase the ability to create our own money so that we will not have to rely more on using foreign currency,” Robertson said.
He added that the prevailing economic environment is not conducive for investors because it kills market confidence.
“We are not getting any investors in the country because this environment is hostile to investors. We have created an economy that is harmful to ourselves. Some people are saying money is losing value, hence they are taking their money and banking it somewhere else which is not in this country, hence we still have cash shortages.”
Last week, the RBZ issued a directive to all banks to freeze the accounts of companies suspected of engaging in money-laundering activities and fuelling the foreign currency parallel market.
Before lifting the prohibition order, the central bank also banned all cash-in, cash-out and cash-back transactions, in a bid to eliminate the buying and selling of cash at a premium.
All these efforts have proven fruitless as the hard cash and foreign currency shortages persist.
COMMENTS
When the go to place to get cash is a boy with a kiosk on a street corner you have a major problem. If the same boy can also create a balance (whether he has actually received something or not, how do you know), that is the second problem. These two evils will sink a nation. These guys were supposed to do a tiny fraction of the cash. If they do the percentages you have now and there is nowhere else to go for cash, its doomsday. Enjoy the ride while it lasts.
This is Zimbabwe Africa – not London comrade tiki. ZW will do things the African way & also ZW will never be a colony again !
As long as there are cash kiosks that can take fake deposits and issue out cash when banks cannot do so, be sure to see this worsening. Cash is a representation of value. When a boy on a street corner can create an RTGS credit – how do you know he has got the cash – this worsens a bad situation
Incorrect calculation comrades – you cant lose more than a hundred cents if you only start with 100.If you have one pig you cant lose more than the one pig !
On 1 February 2019 0ne USD was equal to one RTGS or Zimdollar.
Today the RBOZ rate is one USD equals 15.26 RTGS or Zimdollars.
So to calculate you subtract 1.00 from 15.26 & you get 14.26 – that number divided by 15.26 gives you an answer of 93.4 per cent.
So the RTGS or Zimdollar has lost over 93 % of its value since it was at par with the USD. To say it lost 135.7 % is merely Comrade MISHMA CHAKANYUKA showing that he did not do sums at school or has any understanding of economics 101.
When black hands toughedt something that was good it turned out to be worthless South africa to follow suit
You can’t drop more than 100%. A drop of 100% is ZERO. Perhaps the value of the Zim dollar is almost zero compared with what it was a few months ago. But this article is claiming that it is now negative. Nonsense reporting by MISHMA CHAKANYUKA.