- Zimbabwe dollar depreciated to ZWL2.3 on the latest auction market
- This widened month-to-date losses by 58%
- However, premium narrowed by 50%
Harare- As the government continues preaching the gospel of letting economic forces determine the RBZ-governed foreign currency auction market, the Zimbabwe dollar continued on a free-fall after shedding by a 12-month record of 27% on the 30th of May 2023.
With the latest devaluation of the local currency, the premium narrowed to 50% from 62% last week
The Zimbabwe dollar traded at ZWL2257.0564 against the greenback from ZWL1888.0119 traded for a dollar last week. This is the worst weekly decline in 2023.
This took the month-to-date losses to 58%, the worst performance since the year commenced.
However, though the government seems optimistic about liberating the auction market, the parallel market continues to define that the auction rate is still overvalued.
On the parallel market, against US$1: ZWL2.3k on the auction market, the rate has rocked to ZWL5000 against the single greenback. This is a testament to an excessive supply of money and the worthless of the Zimbabwe dollar in keeping value.
After introducing gold-backed tokens and other measures on the 11th of May, the government passed another rescue package on the 29th of May which targets to increase the Zimbabwe dollar usage.
However, the government fails to understand one key thing, the confidence deficit in the Zimbabwe dollar. The market has lost faith in the Zimbabwe dollar and economic fundamentals are out of order. Therefore, under this economic mess, nothing can be done to resurrect the dire currency.
Government should consider enabling stability first through dollarisation before talking of our own currency.
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