- Sustained Decline: ZiG fell to 28.6829 on November 1, 2024, reflecting a significant week-on-week decrease
- Revised Transaction Limits: The Central Bank has increased transfer limits but cap remains well below the living wage
- Impact of Inflation and Policy: Anticipated liquidity injections by the government to support agricultural initiatives are expected to further escalate exchange rates
Harare- The Zimbabwe Gold (ZiG) has demonstrated a continued suboptimal performance, declining to 28.6829 on November 1, 2024, from 27.44, marking a significant week-on-week decrease.
This downturn represents one of the most pronounced declines following the 43% devaluation enacted by the Central Bank in late September.
In the parallel market, the ZiG is currently trading between 45 and 50 per dollar, creating a substantial premium of 57% post-devaluation.
The rampant inflation, exacerbated by exchange rate volatility, has prompted the Central Bank to revise the ZWG transfer limits for daily and monthly transactions.
The previous limit of 8,000 ZiG per transaction, equivalent to approximately US$177, remains drastically below the prevailing living wage.
For mobile payment platforms, transaction limits for person-to-person, person-to-business, and ZIPIT transfers have been elevated from ZWG 2,400 to ZWG 4,800 per transaction, while the monthly cap has doubled from ZWG 8,000 to ZWG 16,000.
The Reserve Bank of Zimbabwe (RBZ) has communicated, "The public is advised that transactional limits for payments via mobile money and electronic funds transfer platforms have been adjusted upward to facilitate the procurement of goods and services in ZWG."
Conversely, the limits for electronic funds transfers have been recalibrated in response to ongoing exchange rate fluctuations.
Business-to-business transaction thresholds have increased from ZWG 280,000 and ZWG 24,000 to ZWG 560,000 and ZWG 48,000, respectively.
Simultaneously, limits for business-to-person transactions have been revised from ZWG 80,000 and ZWG 8,000 to ZWG 160,000 and ZWG 16,000.
However, these adjustments may prove inadequate, as the revised monthly limit of ZWG 16,000 equates to approximately USD 355.55 at the current exchange rate of 45, which remains significantly below the standard living wage.
Furthermore, by the end of the month, exchange rates are anticipated to escalate due to fiscal mismanagement, with the government likely to inject liquidity into the economy to support programs such as Pfumvudza and the Presidential Agricultural Scheme.
This could diminish effective purchasing power to around US$150, adversely impacting both individuals and businesses.
Lower-income individuals are particularly affected, as a transaction cap of ZWG 4,000 necessitates multiple transactions to reach the monthly limit of ZWG 16,000, incurring cumulative transaction fees that could ultimately reduce the accessible amount to below US$300.
Implementing such caps in a hyperinflationary environment raises significant concerns regarding their efficacy.
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