Zimbabwean Dollar Slightly Strengthens Against US Dollar
On Tuesday, July 4, 2023, the Zimbabwean dollar (ZW$) showed slight signs of strengthening against the United States dollar (USD), reaching 5,395.9619 at the Reserve Bank of Zimbabwe‘s wholesale forex. This is an improvement from the 5,739.7961 recorded on June 29, 2023. Additionally, the central bank reported that the Weighted Average for the day was ZW$580,921.57 per US$1.
The Zimbabwean dollar has recently shown signs of strength, which authorities attribute to various measures introduced to stabilise the macroeconomy and the local currency. However, some analysts are doubtful about the sustainability of the stability, with some suggesting that it is rigged and superficial.
Authorities claim that measures such as requiring corporate tax payment in ZW$ have removed liquidity from the market, creating a higher demand for the Zimbabwean dollar. However, others argue that the central bank is hoarding the Zimbabwean dollar, creating an artificial demand.
Zimbabwean authorities have been attempting to reintroduce the Zimbabwean dollar for years after it was abandoned in 2009 due to hyperinflation. However, the local currency has frequently lost value, with critics suggesting that the Zimbabwean dollar was reintroduced prematurely. Some, including former Finance Minister Tendai Biti, argue that Zimbabwe should redollarise, as the citizenry has lost confidence in the government, which is the main reason why the local currency cannot stabilise.
Some businesses, service providers and even government departments, have in recent months been rejecting the Zimbabwe dollar citing its volatility and also urging authorities to abandon the Zimbabwean dollar.
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Despite this, Reserve Bank of Zimbabwe (RBZ) Governor John Mangudya has rejected the idea of dollarisation, stating that Zimbabwe has no capacity to do so. Mangudya encouraged Zimbabweans to embrace the Zimbabwean dollar, emphasising that dollarisation would have negative consequences.
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