Besides the conflict in Eastern Europe, inflationary pressures in the country were driven mainly by exchange rate depreciation and rising prices. There is an increase of macroeconomic instability, with domestic inflation driven mostly by an excessive preference for US Dollars as a savings currency. This, however, has put pressure on the currency rate, as uneven preferences have increased the rate of change of the Zimbabwe dollar.  This phenomenon has seen a growing USD cash economy and it is estimated that a large portion of domestic transactions are now being conducted in foreign currency. Inflation is also now being driven by expectations of higher inflation and exchange rate depreciation. 

However, the government has adopted several measures to stabilize the currency and lower inflation in conjunction with the central bank, including:

• Lifting of All Restrictions on importation of Basic Goods
• Enhanced Foreign Exchange Auction System
• 100% Retention of Domestic Foreign Currency Earnings
• Gold Coins and Gold backed Digital Tokens
• Promotion of the use of Domestic Currency by Government Agencies
• Adoption of all external loans by Treasury
• Supportive Interest Rate Environment

Although, the government has introduced the above-mentioned measures the prices are still escalating especially on basic commodities, reducing the ZWL power and loss of value for wages of 100% ZWL$ earners. Individuals and companies no longer trust the local currency and that has put pressure on the demand for U.S. dollars.

Below is how the USD is being traded in the parallel market as of 16 May 2023:

Currently, most companies are still getting pressure especially from the employees as well as the outside market on the remuneration structure. Some organizations have adopted the dual currency and others are now paying their employees using the parallel market rate. If you are still questioning yourself on how to fit in the market in terms of salaries kindly get in touch with Precise Management and Research Consultancy (infor@precisemrc.co.zw / +263 717 301 471) for the latest salary and benefit survey report, directors fees survey report as well as the prevailing remuneration structure models.