Investors seem to have welcomed the return of the United States dollar to the Zimbabwe market with the Old Mutual Implied Rate, which measures investor sentiment on the local currency, appreciating by nearly 10 percent from 56.5:1 yesterday to 51.2:1today.
The OMIR had shot up to 80.1:1 on 24 March.
The Reserve Bank of Zimbabwe announced yesterday that it was bringing back the United States dollar to deal with the coronavirus and pegged the exchange rate at 25:1.
The interbank rate which had been allowed to float had dropped from 18:1 on 11 March to 26:1 before the announcement.
Zimbabwe reintroduced its local currency in June last year but critics like former Finance Minister Tendai Biti have been calling for re-dollarisation saying the local currency would not work.
President Emmerson Mnangagwa and his Finance Minister Mthuli Ncube argue that the economy will not grow if they continue using the US dollar.
There has, however, been a run on the local currency which is now trading at 45:1 on the black market down from just over 10:1 when the local currency was reintroduced.
Reacting to the bringing back of the US dollar Biti tweeted: “The regime has radically done a volte face& sneakily re-dollarised.
“We told them it wouldn’t work & won’t work. They owe Zimbabwe an apology and they should now bring a Bill to Parliament formally repealing those sections of the Finance Act that incorporated SI33 & 142of 2019.
“Public policy must be consistent ,predictable &for the public good .It surely can’t be the business of Government to disrupt people s lives .
“If the business of a gvt becomes that of disrupting its citizens then that gvt should have no business in the citizen s business #Shame .
“The confusion around monetary policy &the mismanagement of FX in Zim reflects structural incompetence &indifference Undoing this dog s breakfast will be a nightmare .
“We make the point once more that this is the worst government in the history of governments #RiggingDoesNotPay .”
One of those who supported Biti tweeted: “@MthuliNcube and Mangudya hiding behind corona virus to bring back the US dollar. shame shame shame. useless lot. CLOWNS.”
Another added: “They just had to self quarantine the Zim dollar, it won’t survive the virus.”