Bitcoin soars, stock market rises in post-Mugabe Zimbabwe

Bitcoin (virtual currency) coins placed on Dollar banknotes are seen in this illustration picture, November 6, 2017. REUTERS/Dado Ruvic/Illustration
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HARARE (Reuters) – The price of bitcoin in Zimbabwe soared to a record $17,875 on the local exchange on Monday as investors continued to seek a safe haven for their money trapped in the banks.

For most investors around the world, bitcoin is a volatile and highly speculative bet. For Zimbabweans, however, the cryptocurrency seems to offer rare protection from fears of a return to hyperinflation and financial implosion.

On local exchange, bitcoin was trading at 19.97 percent higher than its closing price on Friday when Emmerson Mnangagwa took office as president, ending 37 years of Robert Mugabe’s rule.

“It looks like people trust bitcoin more than anything else to maintain the value of their money. That is what’s propelling the price,” a local cryptocurrency analyst said.

In the grip of acute shortages of U.S. dollars, Zimbabweans are piling into anything they think might retain value.

On the Zimbabwe Stock Exchange, the main industrial index was up 4.72 percent to 333.68 points on the first full day of trading since Mnangagwa was sworn in as president.

The stock market had lost $6 billion in the week after a military takeover that marked the end of Mugabe’s downfall. The former president resigned from office on Tuesday.

A Harare-based stock broker said the market had been cheered by Mnangagwa’s inauguration speech, in which he promised to work towards economic recovery and re-engagement with the West.

Mnangagwa is expected to form a new cabinet this week, with all eyes on whether he breaks with the past and names a broad-based government or selects old guard figures from Mugabe’s era.

On the streets of Harare, black market rates for U.S. dollars continued to ease. It cost $140 using electronic bank transfer or “Zollars” to buy $100 compared to $150 on Friday.