INVESTORS scurried for safety in stocks this week after the central bank’s monetary policy statement amid concerns over mounting inflationary pressures emanating from a decision to technically devalue local currency balances.
By Chris Muronzi
The order by the central bank on Monday to banks to create separate foreign currency accounts for both corporates and individuals was seen as an admission that the money in circulation is no longer US dollar-denominated.
This comes after Zimbabwe, which adopted the use of the US dollar in 2009 after hyperinflation wiped out the value of the local currency, introduced bond notes, a currency it claimed had the same value with the US dollar two years ago.
The mainstream all-share index reported its biggest gain since January, posting a massive 5,09% jump on Tuesday to close at 122,07 points in a trading session mainly dominated by movers in heavyweight counters. Econet added US$0,24 to close at US$1,55 and Old Mutual was US$0,11 stronger at US$5,46.
Meikles and TSL both increased by US$0,0500 to close at US$0,45 apiece. Delta also traded US$0,0481 higher at US$2,25 while Padenga gained US$0,0464 to close at US$0,66. CBZ was the only lame duck as it lost US$0,0020 to settle at US$0,14. The upward trend continued into Wednesday with the mainstream all-share index surging 1,97% to close at 124,47 points as big caps gained.
Old Mutual led the movers with a US$0,18 gain to close at US$5,65, Econet surge up by US$0,0976 to US$1,65 and Innscor increased by US$0,0231 to close at US$1,40. Proplastics also added US$0,0201 to close at US$0,12 and Delta also traded at US$0,0145 higher at US$2,2650. Zimre Holdings was the only counter trading in the negative as it lost US$0,0022 to end the day at US$0,0216.
Investors are seen piling into equities further as inflationary pressures mount and those holding on to balances rush to buy securities denominated in local currency to preserve value. The local unit is trading at discount to the US dollar already and is seen giving up additional gains.
Meanwhile, the value of the local currency — bond notes, RTGS — fell further to 130% against the US unit this week as demand for forex soared.
Companies and individuals are hunting for US dollars to pay for critical imports and to preserve value.