Zimbabwe’s attempt to ease a dollar shortage and stop its currency from plunging in the black market is showing little sign of working.
The southern African nation’s currency, known as the RTGS$, fell to 4.2 per U.S. dollar Wednesday, its weakest level in more than five months, according to marketwatch.co.zw, a website run by analysts in Harare. That took its decline in March to 18 percent.
The losses came even as the Reserve Bank of Zimbabwe devalued the official rate to 3 per dollar for the first time. The regulator has allowed it to fall from an initial price of 2.50 since formal trading of the unit began last month, after officials stopped insisting it had the same value as the greenback.
Zimbabwe’s President Emmerson Mnangagwa is battling the nation’s worst economic crisis in over a decade, with a scarcity of foreign exchange causing shortages of food and fuel and a surge in inflation to almost 60 percent. Cyclone Idai, which hit Mozambique’s coast earlier this month, may worsen the situation because it devastated of the port city of Beira, which is a vital conduit for landlocked Zimbabwe’s gasoline and wheat imports, according to Texas-based risk-analysis firm Stratfor.
Also, the low supply of dollars on the interbank market is pushing Zimbabwean businesses into the black market. Trading volumes over the past three weeks were $45 million, according to Harare-based NewsDay newspaper, which cited central bank Governor John Mangudya.
The parallel market is “mainly comprised of desperate buyers and few sellers,” said Welcome Mavingire, a managing partner at Intellego Investments Consultants in Harare.