HomeBusiness DigestBond notes weaken against US dollar

Bond notes weaken against US dollar

ZIMBABWE’S bond notes continued losing value to the United States unit with forex dealers in the black market discounting the local currency by as much as 15-20% this week for electronic transactions.

By Chris Muronzi

The bond notes were introduced last year to help ease cash shortages.
The bond notes were introduced last year to help ease cash shortages.

This is despite assurances by the central bank the bond note, which is said to be backed by a US$200 million Afreximbank bond facility, is at par with the greenback.

The bond notes were introduced last year to help ease cash shortages in the country after banks’ nostro accounts ran dry.

Rates for electronic and mobile transactions — transfers, EcoCash and Zipit — ranged between 15-20% this week.

On cash transactions, bond notes are trading at a discount of 5%.

Instead of a par value of 1:1, dealers are, for example, selling US$100 for $105 in bond notes.

The cash rate fluctuates to as low a minimum of 4% depending on the supply.

Bond notes scarcity has helped create price stability in the economy at a time the market is betting on Mangudya to over-supply the market.

Just this week, Mangudya dispelled social media reports he planned to introduce higher-denominated bond notes.

His comments came against social media reports the RBZ wanted to introduce more bond notes in US$10, US$20 and US$50 denominations to ease the cash crisis gripping the nation and would prohibit the use of MasterCard and Visa Card outside the country.

Mangudya said the statements were also calculated at discrediting government and the “bank’s progressive efforts to stabilise the economy and fuel chaos in the economy by targeting the sensitive financial sector”.

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