The black market rate of the Zimbabwe dollar against the United States dollar has plunged following Monday’s decision to make the local currency the sole legal tender for local transactions.
Currency dealers were today buying the greenback for only Z$4.50 which was much lower than the interbank rate of Z$6.37.
They were, however, buying it at Z$7.50 using electronic money.
One trader said the rate had plunged because there no bond notes on the market.
The Reserve Bank on Monday announced that it would mop out Z$1.2 billion from the market by the end of this week to mop out excess liquidity.
Marketwatch, which publishes black market rates every day, did not publish them today.
Shops, which used to sell their goods in US dollars, have, however, converted prices to Zimbabwe dollars using a rate of 1:13 more than double the interbank rate.
To make matters worse they are demanding bond notes and raise the price if one swipes or pays through mobile money.
An economic commentator warned Zimbabwe businesses three weeks ago to restrain themselves from wanton price increases saying they could close in two months due to consumer resistance.
“The next two months will be telling. If we don’t restrain ourselves and continue to increase prices, we will reach a plateau. The levels of inflation and how it has been eroding income of households is so ravaging that the consumers will not continue to sustain their consumer baskets,” Gift Mugano told a joint meeting of the Grain Millers Association of Zimbabwe and retailers.
“So, it is telling to me, that at that point, no retailer or manufacturer will have the capacity to continue. If we reach a plateau, it can result in collapse of industry, retailers and the whole economy,” he warned.
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