Zimbabwe: New Notes Push Exchange Rate Spiral


The parallel market exchange rate has taken a rapid upward spiral since the Reserve Bank of Zimbabwe (RBZ) announced the introduction of the new $ 10 and $ 20 notes as exchange rate fluctuations react to the Increase in circulating cash, established 263Chat Business.

The local currency (ZWL) has fallen nearly 20% against the US dollar (USD) on the parallel market since Thursday last week when the Central Bank announced the issuance of new notes this week.

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This morning the parallel market traded the Zimbabwean dollar at ZWL $ 60 for USD on bank transfers and on the public mobile money platform-OneMoney while on the platform Ecocash, it was trading at ZWL $ 58.

There is concern that the trend in the exchange rate will continue in the two weeks leading up to the first week in June, when the $ 20 bills are expected to begin circulating.

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The Central Bank, however, stressed that the new notes are not an increase in the money supply but a simple exchange of existing RTGS values ​​for cash.

Nevertheless, the market is skeptical about the motivations of the Bank given its history of dishonesty in terms of money supply.

"What we see on the black market is a situation in which currency movements are mainly influenced by speculative trends rather than by any other factor. The movement has to do with what market movers predict, as more "Printed money means there are enough to buy many dollars, so they also increase the amount of zim-dollars needed to buy dollars," said economist Victor Bhoroma.