Zimdollar worse off since 2022
THE local currency, the Zimbabwean dollar, has continued to depreciate against the United States dollar on an unrestrained trajectory, despite various measures implemented by the Reserve Bank of Zimbabwe.
However, the margin of decline has since dwindled to global average. While this has been hailed as “economic stability”, the magnitude of currency devaluation in 2023 has since surpassed 2022 levels, and this has a more negative impact on the business community through exchange losses amidst “currency stability”.
The Zimdollar has shed off -88% against the US dollar since the beginning of the year on the willing-buyer willing-seller market, against a depreciation of -84% in 2022 full year.
on the parallel market, the Zimdollar fell -80% against the US dollar in 2022, and has succumbed to a loss of -87% this year. This indicates that the unit has performed poorly this year already compared to prior year, and is poised to dwindle further.
The worse-off performance of the Zimdollar against prior years is attributed to huge jumps mid-year, which were induced by unprecedented measures from the treasury and policy changes from the central bank, which were meant to curb inflation and exchange rate loss.
These measures involved liberalising the formal exchange rate, which saw a revaluation with respect to informal market dynamics, hence the huge jumps in the once tightly managed formal exchange rates.
on the upside, these measures saw a slow-down in exchange rate in the proceeding months, which has been interpreted as currency stability as this is relative to previous trends.
In the first quarter of 2023, the Zimdollar averaged -9,3% monthly decline against the US dollar, which expanded to -41,7% a month in the second quarter.
In the third quarter of the year, the magnitude marginalised to a monthly average of -10%. In the fourth quarter so far, the average monthly decline is a circa -2%, which reflects “currency stability”. Notably, the Zimdollar appreciated against the USD for the first time in over two years in July this year, firming by 27%.
