Foreign Exchange rates skyrocket in Zimbabwe

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Exchange rates in Zimbabwe, artificially fixed by the government for a long time, shot up sharply on Wednesday after the central bank liberalised them last week, dealers said.

The Zimbabwe dollar, until now pegged at Z$30,000 to the greenback, was on Wednesday trading at Z$185 million=US$1 on the formal market following the liberalisation.

This was even higher than the Z$145 million to the greenback which obtained on the parallel market at the weekend.

The central bank, citing the need to support exporters and stimulate exports, last week liberalised exchange rates after keeping a tight official lid on them for years.

Dealers said they expected rates to go up further as supply was tight with huge industrial demand. “We are in the early stages of ascendancy (of the rates),” a banker said.

But cash shortage at banks, due to high inflation, is forcing people with hard currency to still patronise the black market.

Cash withdrawals in banks are limited, and so are cash transactions for foreign currency trading on the formal market.

As a result, black market dealers are cashing in on the formal market’s cash handicap, and even offering lower rates of around Z$160 million to the greenback to stranded sellers. Panapress .

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