News / Local
Stability of Zimbabwe's currency prompts scrapping of stock market rule
14 Jun 2024 at 10:19hrs | Views
The stability of Zimbabwe's new currency, the ZiG, has prompted authorities to scrap a rule in place since 2022 that requires investors on its main bourse to hold onto stocks for a period of 180 days or risk paying a higher capital gains tax.
The rule was introduced to dissuade speculation on the Zimbabwe Stock Exchange. At the time, the Harare-based bourse was one of the few investment options in the southern African nation for investors to hedge against exchange-rate volatility and inflation. The Zimbabwean dollar, which the ZiG replaced in April, regularly crashed against the dollar.
Since ZiG, the nation's sixth attempt at a stable local currency in 15 years, started trading on April 8 it has appreciated 0.5% against the dollar to 13.49, according to central bank data.
The move is aimed at strengthening the capital markets, George Guvamatanga, the secretary for finance and economic development, said.
"These are measures government is taking to support the local currency the ZiG and reflects government's strong confidence in the full restoration of a full market driven economy," Guvamatanga said Wednesday by text message. The new capital gains tax is set at 2% from 4% and this will further be reviewed after six months, he said. The Securities and Exchange Commission of Zimbabwe has been informed of the changes.
Justin Bgoni, the chief executive officer of the ZSE, welcomed the scrapping of the vesting period saying it's something which the capital markets wanted for a long time.
The rule was introduced to dissuade speculation on the Zimbabwe Stock Exchange. At the time, the Harare-based bourse was one of the few investment options in the southern African nation for investors to hedge against exchange-rate volatility and inflation. The Zimbabwean dollar, which the ZiG replaced in April, regularly crashed against the dollar.
Since ZiG, the nation's sixth attempt at a stable local currency in 15 years, started trading on April 8 it has appreciated 0.5% against the dollar to 13.49, according to central bank data.
"These are measures government is taking to support the local currency the ZiG and reflects government's strong confidence in the full restoration of a full market driven economy," Guvamatanga said Wednesday by text message. The new capital gains tax is set at 2% from 4% and this will further be reviewed after six months, he said. The Securities and Exchange Commission of Zimbabwe has been informed of the changes.
Justin Bgoni, the chief executive officer of the ZSE, welcomed the scrapping of the vesting period saying it's something which the capital markets wanted for a long time.
Source - Bloomberg
