Zimbabwe’s new currency further weakened to 13.4407 to the United States dollar today down from a peak of 13.2517 on 24 April but central bank governor John Mushayavanhu is optimistic it will pick up when companies start paying their quarterly taxes at the end of June, which is less than two months away.
It kicked off at 13.5616 on 8 April when it started trading, having been introduced on 5 April.
The currency is selling at 18 to 20:1 on the blackmarket.
Mushayavanhu, however, said that the rates currently being offered on the blackmarket are fictional because no one is really buying at that price. He said the central bank had tested the market and had found no takers.
He warned the public that those offering rates of up to 20:1 were speculators who wanted to cash in on the peak demand expected in June when they could be selling the ZiG back at 10:1.
Companies are expected to make their quarterly payments on 25 June. The government says half of the taxes must be paid in the local currency.
Mushayavanhu says there is only US$80 million of ZiG in circulation when taxes will require the equivalent of US$150 million which means there will be high demand for ZiG.
Zimbabwe is on a de-dollarisation programme but unlike last time when it abruptly declared that all transactions be in local currency, it has allowed the multiple currency system to operate until the end of 2030 but is looking at gradually phasing out the greenback.
Currently 85% of the transactions in the country are in US dollars. Mushayavanhu is aiming to reduce this to 70:30 by the end of this year and hopefully to 60:40 next year and 50:50 by 2026.
He says once transactions are fifty-fifty, there will not be any need to worry as things will sort themselves out.
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