Confidence returns to a battered Zimbabwe

Emmerson Mnangagwa and his wife Auxillia at the presidential inauguration ceremony in the capital Harare, Zimbabwe, yesterday. Mnangagwa was sworn-in as president after Robert Mugabe resigned on Tuesday. Pictures: Associated Press

JOHANNESBURG – Business confidence is slowly returning in Zimbabwe as markets lift off in the aftermath of hands-on policy announcements by the new administration.

Traders have said that President Emmerson Mnangagwa’s sentiment has boosted the economic recovery prospects with the parallel market currency rates for bond notes firming up.

Others, however, want the new administration to dump the bond notes in favour of the rand or US dollar.

“The rates are going down and this has been the trend since last week Wednesday, but we are still making a profit, because cash suppliers have also reduced their rates. Today, we are accepting bond notes at 19percent for US dollars,” said a currency trader in Harare.

Top Zimbabwean economist John Robertson said the firming parallel market showed that people had been driven into fear under former president Robert Mugabe’s rule. Even those who held on to foreign currency in anticipation of the elevation of Grace Mugabe have begun to trade, boosting circulation in the economy.

He said the market was projected to remain firmer ahead of further policy pronouncements by Mnangagwa.

“Local and international investors have to invest on the ZSE, based on fundamental analysis at this point in time, paying particular attention to the Price to Book ratio, and also incorporating the potential boom in business prospects,” market fundamentals analyst Courage Nemaungwe said.

“Investors have, however, since turned from the panic sell mode to being highly optimistic and are also assessing the new president’s proposed government cost-cutting, his head-on stance on the fight against corruption and (addressing) the liquidity crunch.”

Zimbabweans have also backed Mnangagwa’s call for the return of assets and funds externalised by corporates and individuals under Mugabe.

Mnangagwa extended on olive branch on externalised funds and assets until the end of February next year and restored Patrick Chinamasa as finance minister and Simbarashe Mumbengegwi as foreign affairs minister. Chinamasa is expected to deliver his budget for 2018 next week. – IOL

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