- Zimbabwe dollar surpassed 1000 mark to 1000.2 per US$
- This widened the premium by 42%
- Zimbabwe dollar continues to suffer from confidence deficit and policy slippages
Harare- The embattled Zimbabwe dollar has taken weekly losses to 4%, a record loss since the beginning of the year, as more pressure for the ailing currency mounts ahead of the 2023 elections. The Zimbabwe dollar traded at ZWL1000.0227 on the foreign currency auction market held on the 19th of April 2023 from ZWL959.311 last week.
This took year-to-date losses to 33% and year-on-year losses to record 85%.
The latest performance also widened the premium with the parallel market rate, which is currently trading in a region of ZWL1700-1750 by 42%, almost doubling the formal market rate.
The continued decline in the local currency attests to a confidence deficit in both the financial authorities and the currency itself. A huge part of the currency decadence is due to behavioural economics, courtesy of policy inconsistency by the central bank and treasury.
At a 42% premium, exporters are almost losing half value of the earnings they obtain from RBZ on the 25% retention thresholds.
This affects industrial efficacy to diversify, increase production and value add.
Also, the continued decline of the Zimbabwe dollar shows that the currency has failed, and the need for the government to dollarise.
Dollarisation benefits by ensuring stability and confidence, while focusing on economic fundamentals under a stable economic environment.
Policy slippages and high Zimbabwe dollar liquidity is expected to hype ahead of elections as the government will be cushioning the civil servants, especially the security personnel who plays a key role during elections.
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