How much is a Zim dollar worth?


As I drove past the Puma Service station along Samora Machel in Harare, I glanced at the fuel gauge on my BMW 320i and realised that it was now hitting the “E” territory.

Clearly, I had to fill up my tank with some gas in case I had to pass through the State House on my way to our Borrowdale offices.

While there were no queues at the service station, the dilemma was that the only colour of money accepted at fuel service stations and other outlets is “green”.

All I had was a ZWL Bank Debit Card and an EcoCash-enabled cell-phone.

I had to do a deal first before filling up my car.

I turned into Kwame Nkrumah and it was not difficult to identify the money changers.

The only problem was that I got about 4 different quotes for the green, ranging from ZWL110 to ZWL125.

In a nutshell, I struck a deal at the low end and got myself some fuel.

However, as a follower of economic news and developments on the recently introduced RBZ auction system, it really got me thinking; How much is a Zim dollar worth?

The latest auction results show that the Zim dollar effectively remained unchanged at ZWL 81.67 against the green.

The actual weighted average moved one hundredth of a Zimbabwean cent from ZWL 81.6740 to ZWL 81.6741.

The point here is that we are still far from convergence as there is still a gap of c20%-40% between the official and parallel market exchange rates (depending on transaction value).

That said, exchange rate volatility has been minimal and Zimstats has indicated that year on year inflation reduced from 761% to 659.4% in the month of September 2020.

The drop in inflation numbers can be attributed to exchange rate stabilisation as well as a raft of economic measures such as new controls on mobile money platforms.

Further, the RBZ has also been carrying out excess liquidity mopping from the market.

The RBZ is now targeting annual inflation to reduce to 300% by the year-end on the back of stability on the foreign exchange front.

The graph shows the evolution of exchange rates in Zimbabwe since the introduction of the auction system on the 24th of June 2020.

A key question that has come up is whether the stability experienced in the last couple of months will be sustained.

We think risks remain elevated.

This is because the foreign exchange market in Zimbabwe has been chaotic over the past years as it has been characterised by lots of experiments.

Several ideas have been thrown around. Some proposals even included scrapping bond notes altogether, joining the rand monetary area and making use of cryptocurrencies.

We have also witnessed several exchange rates for different forms of money (bond notes, RTGS and mobile money).

The concern is that a post-Covid era where the economy has opened up means that the stampede for foreign currency from every corner of the economy remains.

There is also a heavy reliance on imports (critical raw materials, spare parts and electronic consumables).

As the demand for foreign currency increases, there will be a cost-push inflation phenomenon as food and clothing retailers as well as other economic agents incorporate the cost of procuring forex (exchange rate premiums) in their prices.

As a result, prices of basic goods will head northwards.

All in all, we think there is no quick-fix solution to the currency issues in Zimbabwe. That said, we see risks of loss in value to holders of ZWL balances or any assets that are directly linked to “local money”.

We have consistently insisted investors to find home for their “local money” in value-preserving assets such as real estate and quality stocks.

We would also recommend exposure in export-oriented businesses such as Padenga and Hippo Valley.

In our view, the biggest losers will be those that will be left holding the largest bag of “local money” and less of USD-denominated assets or greens!

Batanai Matsika is the Head of Research at Morgan & Co, and Founder of He can be reached on +263 78 358 4745 or /

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