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Monday, May 27, 2024

Street rates fall as Zimbabweans accept new currency

Story by Owen Mandovha, Business Reporter

THE new ZiG currency has so far enjoyed a good run on the formal interbank foreign exchange market causing the parallel market to tumble.

When the new ZiG currency was introduced on Monday last week, illegal money changers in their usual get-rich-quick tendencies were waiting on the sidelines to manipulate the local currency.

There were reports that parallel market dealers were already on the prowl offering 20 ZiG for one US dollar which is far higher than the opening rate of 13.56.

This has, however, come to a scratching halt with a market watcher who has been tracking the ZiG saying the new currency has reversed the artificial losses.

“Before the new currency was introduced a lot of people were panicking and immediately disposed their ZiG balances, whereby rates went up to around 20 instead of the opening 13.56. I can tell you now that the rate is going down and the ZiG, you can find it trading at 15 or 16 because there is no more ZiG in the market,” said a market watcher.

Exchange rates statistics posted on the Reserve Bank of Zimbabwe website also indicate that the ZiG currency has strengthened, with the interbank exchange rate firming at 13.36 by the end of trading this Tuesday from 13.42 on Monday.

Market analysts have since implored Reserve Bank of Zimbabwe Governor, Dr John Mushayavanhu to honour his promise of a tight grip on money supply growth.

Africa Roundtable chief executive officer, Mr Kipson Gundani said, “Two key issues here are important, keeping money supply growth under check and also supporting the currency by way of increasing production in that way we will be able to sustain the value of the ZiG.”

“Assessing what is happening in the market, the ZiG has maintained its value, but it also because there are no coins and notes for people to trade. We anticipate the governor to ensure that he walks the talk to control the money supply and capitalise on the goodwill that has so far been created,” said a University of Zimbabwe senior economic lecturer, Dr Nyasha Kaseke.

The Reserve Bank of Zimbabwe indicated that it will not pursue any operations that do not form part of the central bank’s mandate.

This comes after analysts cited the issue of excessive money supply growth as the trigger for the tumbling of the local currency.

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