By Business Reporter – Bankers have warned of fuel shortages and face a resurgence of 2008-style hyperinflation following the rapid devaluation of the Zimbabwe Gold (ZiG) currency.
The Bankers Association of Zimbabwe (BAZ) also said there could be spiralling prices and empty store shelves.
The recent devaluation by the Reserve Bank of Zimbabwe (RBZ) pushed the official exchange rate from ZiG14.1 per US$1 to ZiG24.3, further weakening to ZiG25.2 this week.
According to a leaked internal report, BAZ cautioned that continued depreciation could trigger rampant inflation and shortages of essential goods, a haunting reminder of the 2008 economic crisis when Zimbabwe faced over 79 billion percent inflation.
The BAZ document warns of price hikes on basic items like food and fuel, exacerbating inflationary pressures already evident in the economy.
“If market conditions remain unfavourable, such as high inflation, low investor confidence or trade imbalances, the ZiG will depreciate rapidly.
This can lead to higher costs for imports and inflationary pressures on goods priced in foreign currency.
There’s a need to ensure sufficient forex to meet demand. Demand can be limited by minimising creation of local currency,” .
The association also noted that the RBZ’s increase in interest rates, from 25% to 35%, and a 30% hike in statutory reserve requirements would worsen borrowing costs, limit investment, and further fuel inflation.
With the informal sector at risk due to restrictions on foreign currency transfers, Zimbabwe’s fragile economy could see job losses and severe disruptions.
The rising economic instability may erode confidence in the local currency, drawing comparisons to the devastating economic collapse of 2008 when goods vanished from store shelves and the population faced extreme hardship.