Zimdollar tumbles

Eric Chiriga

THE Zimbabwe dollar depreciated by 18% and 11% against the South African rand and Botswana pula respectively last month, Finhold‘s Monthly Economic Update has revealed.


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“The Zimbabwe dollar fell sharply by 18% against the South African rand and 11% against Botswana pula on the foreign currency auction market,” Finhold said in the update.


This is contrary to the government’s claim that the country’s currency is firming and the economy is recovering. Finhold said the rejection rate of bids averaged 88% during the same period.


“The total amount of bids fell from about US$62 million to US$31 million while the total number of bids fell from 2 813 on December 2 2004 to 1 342 on December 24 2004,” the finance company said.


In the update, Finhold said there was more activity on the international currency markets where the euro set record high levels against the US dollar and Japanese yen, while the US dollar traded at near record low levels for the better part of the month under review.


In the same period the Zimbabwe dollar depreciated by 1% against the US dollar.


The Zimbabwe dollar is currently trading at US$1:$7 500, R1:$1 500 and BWP1:$1 900 on the parallel market while on the foreign currency auction the Zimbabwe dollar is trading at US$1:$5 797, R1:$963 and BWP1:$1 301.


Finhold added that in the same period of December 2004, the money market recorded a monthly average shortage of $660 billion.


“The money market recorded a monthly average shortage of $660 billion compared to a monthly average shortage of $93 billion and $266 billion recorded in October and November 2004.”


The shortage was an improvement from a deficit of $943 billion on December 1.


Despite the persistent money market shortages, interest rates fell significantly.


Finhold said interest rates were expected to fall further as liquidity conditions improve in response to the just-ended corporate tax payment period and a significant portion of treasury bill maturities.

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