- ZiG started September trading at a lower rate of 13.8603, down from 13.8546 on August 30
- The parallel market rate plunged to 25 per dollar, highlighting a 75% premium
- RBZ has restricted invoice submissions to multiple banks and local loan usage in foreign exchange markets to stabilize the currency
Harare- Zimbabwe Gold (ZiG) has opened the first week of September on a lower note, trading at 13.8603, down from 13.8546 on August 30, 2024.
Further declines have been observed, with the rate weakening to ZiG 13.8742 on September 5, 2024, extending weekly deficits from 13.8388 on August 29, 2024.
Despite these marginal declines in the formal market, the parallel market presents a different picture. The rate has plummeted to 25 per dollar, creating a premium of 75%.
This situation persists despite the Reserve Bank of Zimbabwe (RBZ) injecting US$190 million into the forex markets since the inception of ZiG.
Recognizing the challenges, the Reserve Bank of Zimbabwe has implemented additional measures aimed at enhancing transparency and efficiency in foreign exchange transactions to support Zimbabwe Gold (ZiG).
These measures focus on critical areas such as invoice submissions, restrictions on loan proceeds, and compliance requirements for market participants.
By addressing these key issues, the RBZ aims to create a more stable economic environment that can positively influence the value of ZiG.
One significant change is the limitation on invoice submissions. Companies can now submit invoices for the same goods to a maximum of two banks.
This measure is intended to prevent the duplication of invoices, which can lead to fraudulent activities and misuse of foreign exchange resources.
Another important measure prohibits the use of local loan proceeds to participate in the interbank foreign exchange market. This means businesses cannot leverage borrowed funds for foreign exchange transactions.
This prohibition reinforces the principle of responsible borrowing, ensuring that market participants engage in foreign exchange transactions using their own capital. The RBZ aims to curb speculation that could artificially inflate currency demand through this restriction.
Such measures are designed to prevent speculative behavior that might distort currency values. When companies rely on loans for foreign exchange activities, it can inflate the demand for foreign currency and exacerbate exchange rate volatility.
The US dollar continues to be the currency of choice, providing a buffer against economic fluctuations and instability.
The preference for USD over the local currency reflects growing confidence among investors, who increasingly view the US dollar as a more stable and reliable store of value.
Additionally, the US dollar is favored for covering essential services like rent and fuel, areas where ZiG has not yet gained a foothold.
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