Zimdollar losing grip after months of stability

Since the disputed general election held last month, the Zimbabwean dollar has been gradually depreciating on both the official and parallel forex markets. A day before the harmonized elections on August 23, the official exchange rate was US$1 to Z$4,568,385.3, while the parallel market rate was US$1 to Z$6,500. As of Friday, the official exchange rate had depreciated to US$1 to Z$4,714,534.1, and the parallel rate was US$1 to Z$8,000.

Persistence Gwanyanya, a member of the Reserve Bank of Zimbabwe's monetary policy committee, attributed the exchange rate decline to sentiment rather than fundamental changes in the economy. He noted that there were predictions of exchange rate depreciation before and after the elections, but the market defied these forecasts. Gwanyanya anticipated that exchange rate stability would return and urged the government to maintain tight monetary policies.

Economist Prosper Chitambara emphasized the importance of fiscal discipline in maintaining exchange rate stability, highlighting the need to control public spending and enhance the efficiency of government expenditures, particularly in infrastructure projects. He also stressed the importance of controlling money supply growth, especially during the agricultural season, which tends to increase public spending and monetary growth.

In summary, Zimbabwe is experiencing a depreciation of its currency, and experts recommend maintaining tight monetary policies, fiscal discipline, and controlling money supply growth to achieve exchange rate stability.