THE Zimbabwean dollar continues to tumble on the parallel market as foreign currency shortages on the auction floors drive desperate bidders on to the black market.
The parallel market has been galloping over the past six months boosted by perennial foreign currency shortage on the official market.
This week the fragile Zimbabwean dollar plunged even further against the world’s major currencies.
It has also been trailing other major regional currencies that are buoyed by better economic performance.
The Zimdollar this week traded at a record low of $22 000 against the British pound. In some cases the rate was higher depending on the volumes on offer.
This is up on last week’s $21 000 versus the British pound. The dollar has lost more than 50% of its value over the part six months.
On the auction rate the Zimdollar has shed just 10% during the same period.
In October last year the parallel rate of the pound against the dollar was hovering around $13 600 while the official rate was floating at around $10 000.
The local currency has also continued weaker against the United States dollar, which ironically has been struggling against other major world currencies like the euro, pound and the yen of Japan.
On the parallel market the US dollar is fetching about $11 500. There are other black spots in the city centre where the rate is as high as $12 500 depending on the volumes on offer. Six months ago black market rate was around US1:$7 500.
On the auctions the Zimdollar has been losing ground gradually from a rate of $5 600 last year to the current $6 100:US$1.
The dollar has also come under pressure against regional currencies which are also firming. It lost ground against the rand slipping on the parallel market to $2 500:R1 from about $1 250:R1 at the close of last year.
The auction on the other hand was slow to move, notching just over $1 000 against the rand compared to about $980:R1 by December last year.
Analysts say the unattractive rates on the official market have created a ready market for the parallel market that shows no signs of relenting at the moment.
Demand continues to surpass supply and inflows on the auction. Some companies have had to wait for more than three months to get a foreign currency allocation.
In January the central bank rejected 93% foreign currency bids on the auction market up from 88% bids which were thrown out in December.
Analysts say the shortfall in the official market is being filled by the parallel market rate. They say the trend is likely to continue in the long-term until there is enough foreign currency to go around.