Zimdollar plunges after weekend gains

Zimdollar plunges after weekend gains
Published: 27 September 2019
The value of the Zimbabwe dollar yesterday plunged against the United States dollar after stabilising at the weekend following the Reserve Bank of Zimbabwe (RBZ)'s decision to freeze bank accounts of four companies allegedly implicated in money-laundering activities.

The RBZ's dramatic swoop on Sakunda Holdings, Access Finance, Croco Motors and Spartan Securities bank accounts following allegations of money-laundering and undermining of the local currency last Friday, somehow stabilised the local currency at the weekend.

That was after the Zimdollar lost value, trading at 1:23 by Friday from 1:14 at the beginning of the week on the parallel market.

The local currency firmed after the freeze of the accounts, forcing the black market rates to tumble to about 1:13.

The firming of the local currency triggered premature celebrations, with some people taking to social media platforms to celebrate President Emmerson Mnangagwa's clampdown on suspected economic saboteurs, including his adviser and Command Agriculture benefactor Kudakwashe Tagwirei.

But the Zimdollar yesterday took a sharp knock, trading 1:18,5 against the US dollar on the parallel market by close of business against 1:15 recorded in the morning.

Trade was low on Monday with most cash dealers holding onto their greenback while monitoring the situation.

Economist Kipson Gundani said the fall of the Zimdollar showed that there were many companies moving high volumes of cash apart from those whose bank accounts were frozen.

"There was shock in the market when the accounts were frozen and those companies held on to their RTGS and the rate plummeted. As people began to realise that life continues, they are back on the market and the RTGS is plunging," Gundani said.

"The biggest source of these RTGS dollars chasing the US dollar is the RBZ; it should stop the habit of printing money and these quasi-fiscal activities and otherwise we are back in the Gideon Gono (former RBZ governor) era. The only difference is that Gono was printing bearer cheques and
John Mangudya is printing the bond notes, but all is the same."

But the RBZ has denied fuelling the illegal foreign currency trading.

Prices of commodities in retail shops remained high, even after the firming of the local currency.

Yesterday, NewsDay observed that prices had not been reviewed downwards.

A 2-litre bottle of Mazoe Orange Crush juice now costs $36 in most shops, up from $24 last Monday, 2 litres cooking oil going for $44 in most shops as opposed to $27 last week.

The prices of most basic goods remained high and are set to increase as the rate of RTGS continues to plunge against the US dollar, which still remains the reference point despite the introduction of the Zimdollar as the sole legal tender in Zimbabwe in February.
- newsday
Tags: Zimdollar,


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