Zimbabwe’s largest business group warns local currency could collapse By Reuters

0


© Reuters. FILE PHOTO: Zimbabwe’s new two dollar bills and coins are on display outside a bank in Harare, Zimbabwe, November 12, 2019. REUTERS / Philimon Bulawayo / File Photo

HARARE (Reuters) – Zimbabwe’s currency is at risk of collapsing as businesses resort to the US dollar for transactions, the country’s largest trading group said in a letter to its members, amid a crackdown on trade in currencies on the black market.

Following the arrest of numerous foreign currency traders in recent weeks on suspicion of being involved in trading the US dollar on the black market, the government on Thursday threatened to suspend the licenses of companies using US dollar rates. black market to fix the price of their goods and services.

The Zimbabwe Confederation of Industries (CZI), the largest corporate representative body, said it had warned the government against criminalizing businesses and traders, according to the letter sent last week and shared with the media. Monday.

“The biggest risk the economy is currently facing is an inappropriate policy response to the growing black market premium,” the organization said, referring to the difference between the values ​​of official currencies and those of the black market.

“The crackdown on informal foreign exchange trading in the absence of a functioning formal market will have catastrophic consequences for the economy. “

The value of the national currency weakened to 88 per US dollar in the official market as of October 11, from 2.5 per dollar in February 2019. It is trading significantly lower, at around 170 per dollar, on the black market, according to online exchange rate monitoring website zimrates.com.

The CZI said the weekly currency auction system introduced by the government in June 2020 needed to be revised as it was no longer effective, taking up to 15 weeks – instead of the planned two days – to allocate currency, which hampered growth. work.

“The Zimbabwean dollar is now in real danger … well thought out policy measures must be implemented by the authorities aimed at restoring confidence in the foreign exchange markets,” CZI said.

The southern African nation gave up its currency in 2009, but President Emmerson Mnangagwa ordered its return in 2019.

Disclaimer: Fusion media would like to remind you that the data contained in this site is not necessarily real time or accurate. All CFDs (stocks, indices, futures) and Forex prices are not provided by the exchanges but rather by market makers. Therefore, the prices may not be exact and may differ from the actual market price, which means that the prices are indicative and not suitable for trading purposes. Therefore, Fusion Media assumes no responsibility for any business losses that you may incur as a result of the use of such data.

Fusion media or anyone involved with Fusion Media will accept no responsibility for any loss or damage resulting from reliance on any information, including data, quotes, graphics and buy / sell signals contained in this website. Please be fully informed about the risks and costs associated with trading in the financial markets, it is one of the riskiest forms of investing possible.


Leave A Reply

Your email address will not be published.