Monetary exchange rates have historically been indicative of actual economic and political conditions. The economic well-being of any economy is based on the effective functioning of the financial sector, however, the profitability of banks is based mainly upon their intermediation duty in the financial system, which exposes banks to various risks. The reintroduction of the local currency in different phases from 2014 to 2018, destabilized the economy and caused exchange rate and inflationary pressures in the country, thus exposing banks to exchange rate risks due to the continual weakening of the Zimbabwean currency.
Currently, the government showed concern about the escalating prices of basic commodities and designated a committee to study and monitor, as retailers make adjustments in reaction to the decrease in the value of the Zimbabwean dollar. The local currency has lost nearly half of its value since last year despite various measures introduced by the Reserve Bank of Zimbabwe to stem the slide including gold coins and, lately, gold-backed coins.
Although the RBZ`s auction rate stood at ZWL$ 1,212.5448 against the US dollar on Tuesday the 9th of May 2023, the more widely used parallel market rate was more than double at between ZWL$ 2,500 and ZWL$ 2,800. This rapid movement of the parallel market rate is mainly because of the expectations of increased foreign currency supply in the market when the tobacco marketing season opened, however the supply of USD has been lower than expected in the last weeks. Local manufacturers are openly rejecting the RTGS (real-time gross settlement) proving once more that an economy will never be run by statutory instruments, hence the need for an urgent meeting to address the failed de-dollarisation experiment.
Below is how the USD is being traded in the parallel market as of 9 May 2023:
|
RATE |
VALUE (ZWL) |
|
USD / ZWL ZIPIT/Bank |
2800 |
|
PARALLEL
MARKET SELL RATE |
2500 |
|
PARALLEL MARKET BUY RATE |
2240 |
|
USD/
ZWL SWIPE |
2800 |
|
USD/ ZWL One Money |
2200 |
|
USD/
ZWL ECOCASH |
2200 |
|
USD/BOND or ZWL CASH |
1600 |
|
Maximum
Rate Businesses Can Use |
1344.5014 |
