Parallel market rates on bond notes against the United States dollar, which had plunged from a record 600 percent to 150 percent early this week, shot up again to the region between 350 to 400 percent.
The real time gross settlement (RTGS) rates against the greenback, which had also tumbled to as much as 200 percent, went up to 400 -450 percent.
The spike in rates coincided with rising prices of basic goods, fanning fears that Zimbabwe is sliding towards a full blown currency crisis.
The financial turmoil in Zimbabwe is showing signs of spilling over into the rest of the economy. Prices of basic goods have gone up across the board, a move which is shaking international investors’ confidence in the country.
The worsening situation, compounded by lack of foreign currency to support the country’s huge appetite for imports, is also making it difficult for several companies to restock because of the acute shortages of foreign currency.
Companies are now forced to procure the foreign currency, especially the greenback from dark markets, where premiums are high, pushing their costs up. Economist John Robertson told Business Times yesterday the economic situation could worsen further if government fails to restore “market value”.
“Yes, there is fear that we are heading for bad or worsening times in this country,” Robertson said. “I think what is missing is the trust. Most people don’t trust measures recently put in place by the government. It’s very unfortunate that people have reacted this way, where we now have extreme exchange rates against the United States dollar in the market, prices which are skyrocketing and some companies failing to re-stock.
“It’s unfortunate that people are now into panic buying and hoarding.
“I see the crisis deepening for some time if government doesn’t move in to restore market value. But, am sure empty shelves will be filled again.” Another economist, James Wadi, who is BancABC’s group chief economist, said most companies were accessing foreign currency informally, pushing black market rate northwards.
“I hope this economic crisis is temporary,” Wadi told Business Times yesterday.
“The biggest challenge is that businesses have not been able to access foreign currency formally and timely.
“This resulted in them (companies) accessing foreign currency informally, pushing (black market) rates up.
“But, my feeling is that we will be able to navigate this rough patch once we get a financial injection especially the lines of credit the central bank promised business is available. The other thing is that a monetary framework put in place by the central bank should be able to turn this difficult phase around.”
In a move to grease the financial system, Zimbabwe is currently in discussions with the Cairo headquartered financial institution, the African Export Import Bank (Afreximbank) for a $500 million nostro stabilisation facility. The facility is expected to support payment for critical imports.