Forex rates tumble by 30pc in Zimbabwe

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HARARE – The inauguration of President Emmerson Mnangagwa last week has seen the costs of United States dollars on the parallel market tumbling down by 30 percent while banks have started disbursing the elusive greenback to depositors.

A survey done yesterday revealed that US$100 now cost the equivalent of $130 in bond notes on the black market, down from $190 in early November.

Rates for Real Time Gross Settlements (RTGS) system have also decreased from 100 percent a few weeks ago to around 45 percent for the US dollar.

On Wednesday, the majority of Zimbabweans were able to withdraw greenbacks from Automated Teller Machines (ATMs) for the first time in about a year as hard currency started trickling back into the economy following Robert Mugabe’s ouster as president.

The country’s fragile banking system had stopped stocking ATMs with US dollars several months ago as a severe cash shortage restricted access to the international currency.

Reserve Bank of Zimbabwe governor John Mangudya’s decision to introduce bond notes almost a year ago also failed to stem the cash shortages — a symptom of the country’s economic collapse — prompting banks to limit cash withdrawals to $20 per customer.

Economic analysts the coming in of Mnangagwa as Zimbabwe’s second executive president last week seems to be heralding a new era for the nation that has known only hardship and suffering in the last 20 years.

“We are seeing signs of renewed confidence in the economy,” Finance ministry permanent secretary Willard Manungo said.

Financial institutions that have been issuing United States dollars in increased volumes to all depositors include Stanbic Bank, MBCA, FBC Bank, Standard Chartered and Barclays among others.

Manungo said Mnangagwa’s decision to stamp out corruption, improve ease of doing business and attract new foreign direct investments was boarding well for the economy.

“There’s readiness by the President to implement what has been agreed upon by all various stakeholders and this is what is bringing confidence.

“We need to ride on the readiness of the new political dispensation to move forward by growing the economy, creating jobs and reducing poverty,” he said.

Mnangagwa, who appears open to limited economic reform, including of the indigenisation laws that force foreign-owned companies to sell majority stakes to locals, has hit the ground running and on Tuesday announced measures to cut Zimbabwe’s government costs.

He singled out the rebuilding of the economy and the improvement of livelihoods as “urgent and imperative matters” in his address to permanent secretaries of all ministries.

“Our prime focus should be on the implementation of practical solutions to grow our economy, create jobs and boost incomes,” he said.

Mnangagwa, a long time-ally of Mugabe, also warned that his government would not excuse “bureaucratic slothfulness which is quick to brandish procedures as an excuse for stalling service delivery. Our mantra should be peak performance, peak performance, peak performance”.

He has given criminals who externalised foreign currency and assets a 90-day grace period to return the loot or face the “pain of the long arm of the law”.

Manungo said the president’s various reforms and austerity measures aimed at cutting government expenditure would be consolidated in the upcoming National Budget framework to be presented next month.

The Zimbabwe Stock Exchange Zimbabwe also seem to have embraced the new era after it dropped $6 billion in an eight-day blitz as the market engaged in a drastic self-correction following a change of guard in the country’s political leadership.

“Investors are expecting to see a positive change, that is the reason why the market is correcting itself from the bull-run which was largely driven by panic buying as investors seek to hedge themselves from the monetary developments that were taking place ,” said an analyst.

Since last week, the market has gained over a $1 billion as confidence slowly returns to one of the country’s economic indicators.  –— The Financial Gazette