Economists have predicted that the prices of goods and services will continue to skyrocket as the value of the Zimbabwe dollar plunged against the United States dollar on Friday on the black market.
Reports suggest that the local currency fell to as low as 40 against the US dollar on Friday, as a State-owned enterprise was in the market to raise foreign currency for its imports.
Economist John Robertson on Friday night told the Daily News that the depreciation of the local unit is being caused by people who want to move their money out of Zimbabwe as soon as they can. He said:
People want to move money out of the country and they are prepared to sell the Zimbabwe dollar at any price to get foreign currency.
This is causing market distortions because confidence is very low. They are prepared to get money out of the country at any cost.
It’s a confidence issue … and that is where the problem is coming from. This will result in an increase in inflation.
Brains Muchemwa, another economist, told the publication that the government has to stop injecting unproductive money into the economy. He said:
It will only take honest commitment by the government to cease the injection of huge amounts of unproductive money into the economy to stabilise the exchange rate, short of which the exchange rate will never be stable.
Zimbabwe has been facing acute shortages of fuel, medicines, food, electricity and clean water for years, and the problems worsened after the military seized power in November 2017.