Zim’s new currency has shed 20% since introductionFin24

Source: Zim’s new currency has shed 20% since introduction | Fin24

Finance Minister of Zimbabwe Mthuli Ncube, gestures during an interview with AFP at the World Economic Forum annual meeting, on January 22, 2019, in Davos, eastern Switzerland. (FABRICE COFFRINI/AFP/Getty Images)

Zimbabwe’s local currency, the RTGS dollar, has shed more than 20% of its value since its introduction as the availability of foreign currency on the formal market remains subdued.

By Friday the RTGS dollar had weakened to RTGS$ 3.0120 against the US dollar, a 20% drop.

Analysts attribute the continued slide of the local currency to the limited availability of foreign currency on the formal market, with export earners expecting it to weaken further.

“There is a feeling in the market that the formal market rate is being managed by the central bank, so export earners are reluctant to sell. But now that the rate has weakened further, we expect the market to be liquid going forward,”said Walter Mandeya of Trigrams Investments.

Late in February, Zimbabwe introduced a new currency called the RTGS, or real-time gross settlement dollar, in the process abandoning its long-held 1:1 parity between the US dollar and its local transactional instrument – the bond note.

The introduction of the new currency was also accompanied by the introduction of a market-based foreign exchange market, where the value of the local currency against other global currencies would be determined by market forces, through what is called an interbank market.

At the start, the Reserve Bank of Zimbabwe put an official rate of RTGS$2.5:US$1. This has since devalued to current levels.

The official exchange rate is however 40% lower than what is prevailing on the parallel market, where the RTGS dollar is trading at 4.2 times the greenback.

COMMENTS

WORDPRESS: 2
  • comment-avatar
    Ndebele 3 years ago

    Well done Mthuli. You are the main hero in the Great Bank Robbery and have taken Gideon Gonzo’s star role in the Tragedy. You are etched into the history of Zimbabwe forever with Eddie Cross now supporting your Great Bank Robbery by taking all the peoples’ money. Yu are a living legend., like Shiri, Mugabe and ED who murdered 20 000 civilans in Matabeleland. Now you can do it with the a dash of the pen and thousands will die from starvation unless they leave the country. Brilliant Genocide with the Printing Press Mthuli and Eddie. Your well dressed appearance in collar and tie make you look really professional whilst you are your Zanu deeds.

  • comment-avatar
    kutambura hakuperi 3 years ago

    In spite of all this let’s think of government workers called teachers whom you pay in RTGs. The situation of teachers needs no union now to advocate. Get to a school and look into teachers eye sockets, elbows, and thin arms. They tell a story about the true value of their RTGS salary. These are the workers who are starving right now. Prices which are already up were changed upwards almost daily in shops.
    With this worsening situation it will be a current government’s shame when teachers die of starvation at their working places . Prices for Food have gone up so mad what about medication? Will it be affordable with this RTGs? Never. In 2008 teachers left to look for survival somewhere else. When they came back they were told to go to hell. This year teachers went on strike as an effort to tell the government to correct the discrepancies between prices and salary, but they were shamefully conditioned to go back to work empty handed. They were told of being involved in politics instead of teaching.
    So this time teachers are not going anywhere due to this kind ofreaction from government. Teachers will soon be found dead in their one room accommodations in their respective schools. If a doctor cried in front of the minister, a teacher surely will only be found starving to death.