Who is playing yoyo with Zimbabwe’s currency?

The Zimbabwe dollar has plunged from 25: 1 to 40:1 on the Old Mutual Implied Rate (OMIR) over the last five weeks raising questions as to who is playing yoyo with the local currency.

The currency has remained stable at around 17:1 on the interbank rate but it has fallen slightly on the black market where it is now 19:1 for cash and 25:1 for electronic money.

The OMIR is the comparison of the Old Mutual price on the London and Harare exchanges and is a yardstick of market sentiment on the stock exchange.

A financial analyst said the fall could be due to lack of positive news from the government on how it is going to tackle things like inflation, the exchange rate itself as well as drought.

Inflation is currently estimated at 521% while 7.7 million people are said to be in need of food aid.

The decline in OMIR could also be an indication that the market is losing confidence in Finance Minister Mthuli Ncube.

He announced on Friday that the five things he is focussing on this year are cash shortage, food security, the exchange rate, the availability of power and employment creation.

On Friday, the OMIR stood at 36.61 but plunged to 40.73 yesterday where it remained today.

Two Zimbabwe African National Union-Patriotic Front youth leaders Lewis Matutu and Godfrey Tsenengamu accused three businessmen- Bill Rautenbach of Green Fuel which manufactures ethanol that is used to blend petrol, Kuda Tagwirei of Sakunda who is one of the country’s biggest fuel importers, and Tafadzwa Musarara of the Grain Millers Association of Zimbabwe- of bleeding the country’s economy.

The ruling party’s youth wing dissociated themselves from the statement by Matutu and Tsenengamu.

Musarara dismissed allegations that he was working with a clique of white people to divert maize meal to the black market and said instead he was working on a private sector initiative to augment government efforts to import maize.

He said that he had instructed his lawyers to sue the Matutu and Tsenengamu.

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Charles Rukuni

The Insider is a political and business bulletin about Zimbabwe, edited by Charles Rukuni. Founded in 1990, it was a printed 12-page subscription only newsletter until 2003 when Zimbabwe's hyper-inflation made it impossible to continue printing.