Zimbabwe’s government admitted Wednesday that its domestic currency is facing new pressure as its value continues on a sharp slide against the United States dollar.
The official exchange rate, decided at a weekly auction tightly controlled by the central bank, has the Zimbabwe dollar trading at 1:87 to the United States dollar – but on the black market, one United States dollar can sell for between Z$150 and Z$180, and many businesses and individuals who are unable to buy forex at the auctions buy currency there.
Vice President Constatino Chiwenga – speaking at the Zimbabwe International Trade Fair in Bulawayo – suggested the Zimbabwe dollar was being deliberately sabotaged.
“The drawback, which we continue to face, is indiscipline on the parallel market, which continues to stir up negative expectations that undermine the impressive efforts by the monetary authorities,” Chiwenga said.
“I wish to warn the perpetrators of this heinous crime that the long arm of the law will soon catch up with them.”
Zimbabwe reintroduced its own currency, the Zimbabwe dollar, in June 2019, ending a decade of dollarisation. The move sent inflation rocketing to as high as 837.53 percent by July last year, reviving memories of hyperinflation that wiped out the economy in 2008.
The government has since allowed the U.S. dollar to circulate alongside the local unit, and inflation has come down to around 50.24 percent.
The central bank introduced weekly foreign currency auctions last year to improve access to dollars. But traders said it currently takes up to seven weeks for successful bidders to receive their allocations, which is disrupting companies’ operations.
The Zimbabwe dollar has traded between 82-87 to the US dollar since January, leading to accusations by business leaders that authorities were fixing the exchange rate, which the central bank denies.