ZW$ performance in 2022 to date

The Zimbabwe(ZW$) dollar weakened by a further 3% during the latest auction market held on Tuesday to trade at 155.1419 against the greenback from 150.2157 against the United States dollar(USD) as the battle to revive the ailing currency continues. Parallel market rates have soared to a range between 320 and 350 against the US dollar.

As a measure to give momentum to the dilapidating currency, the government announced that import duty for vehicles was now payable in local currency up to 50%. The government further blamed the succumbing of ZW$ on illicit foreign currency dealings by companies resulting in some of them being either suspended or fined. The latest company to be suspended on operating as an authorised dealer was Metbank, which was suspended yesterday on allegations of breaching the Exchange Control Regulations in foreign currency dealings.

Rolink Finance was also suspended from operating as a bureau de change and further fined US$120 000 or its equivalent in the local currency for breaching the Exchange Control Order.

The government has been carrying out these measures since 2021 but failed to hold the ballooning Zimbabwe dollar. Since the beginning of the year despite suspensions, fines and measures implemented by the government through the Reserve Bank of Zimbabwe and the Finance and Economic Development Ministry, the Zimbabwe dollar has tumbled by 38% while using the parallel market rate, which is mainly used by over 100%.

Regional Markets

Rand weakens to 7-weeks low as floods, power cuts bite

Rand traded at 15 yesterday against the greenback from 14.5 registered last week. This was its lowest trade since March 15 2022. The deficit was widened by the return of severe power cuts and devastating floods in KwaZulu-Natal and the Eastern Cape raising concerns over the country's economic outlook.

Also, risk appetite was dented by global factors including a firming greenback on the prospect of aggressive rate hikes by the Federal Reserve and a deterioration in projections for global growth.

However, the rand is still up by 5.3% so far on the year, partially supported by soaring commodity prices and expectations of continued monetary policy tightening by the South African Reserve Bank.

Naira rebounds from prior session losses

After two sessions of suspended trading over the Easter holidays, the Naira returned stronger as it appreciated against the US dollar by 0.12%.

Data from FMDQ securities shows Naira increased in value on Tuesday by 0.12% to close at N417.00/$1 compared with the exchange rate of N417.50/$1 before the Easter break on Thursday.

The market data also showed increased liquidity for Investors and Exporters who exchanged $155.44 million.

However, Nigerian Export Promotion Council (NEPC) revealed that the naira recorded a devaluation of over 300% over the past 15 years.

Speaking at a press conference in Abuja on Wednesday, the Executive Director of NEPC, Dr Ezra Yakusak explained that the preceding years have shown deep susceptibilities in the non-oil export sector of the economy in particular and indeed the Nigerian economy in general.

Shilling drops to 115.5 from 115.3 against the US dollar

The Kenyan currency waked to 115.5 from 115.3 last week as it continued to respond to inflation rise and scarcity of US dollars.

The government of Kenya has been taking bold steps to revive the economy by availing funds to various economic sectors. On April 21 2022, the Ministry of Transport revealed further plans to spend KSh151 million on the upgrading of four county airstrips, seeking to boost tourism by meeting the rising demand for domestic air travel.

The upgrades are meant to allow the aforementioned airstrips to accommodate larger aircraft as local airlines expand to new routes as demand for air travel picks following the easing of COVID-19 restrictions.

Tourism accounts for over 10% of Kenya’s Gross Domestic Product and in 2019 before the outbreak of COVID-19, the contribution of travel and tourism to GDP for Kenya was US8.5 billion dollars.

Pula drops marginally to 11.7

Pula buried its long-term performance of 11.5 against the USD yesterday after gaining by 0.2 percentage points to trade at 11.7. the Pula had remained unshaken at 11.5 for weeks buoyed by high commodity prices. Historically, the Botswana Pula reached an all-time low of 12.36 in April of 2020.

Botswana’s annual inflation rate was at a near 13-year high of 10.6% in February of 2022, unchanged from the previous month with the main upward pressure coming from the prices of transport alcoholic beverages and tobacco.

The Pula is expected to trade at 11.6 by the end of this quarter, according to Trading Economics global macro models and analysts’ expectations.

Kwacha steadies at 17.4

Zambian Kwacha remained steady at 17.4 yesterday which was traded last week against the greenback steadying three straight gains in a row. Historically, Kwacha reached an all-time low of 22.65 in July of 2021.

However, Excessive demand for United States dollars on the interbank market has continued to put pressure on the Zambian Kwacha.