Monday Blues would be apt definition of the mood for The Zimbabwe dollar today as it continues to sing the Blues.
The local currency’s value plummeted to its heaviest fall yet on the official market as it crashed to $275zwl to $1USD in today’s trading on the interbank market.
This is down by $110 from last week’s figure of $165ZWL to $1USD, signaling a 60% loss of value in just a week.
It certainly indicates a move towards a willing seller/willing buyer arrangement for the under pressure currency and a slap in the face for the cocktail of Ad hoc measures that the fidgety government of President Emmerson Mnangagwa has promulgated recently to try and save the currency from total collapse.
Amongst the cocktail of measures recently availed by the authorities, is the ban on lending by banks. This has sent shivers down the spine of the market as bank lending is the primary driver of economic activity in any normal country.
It also flies in the face of the “Zimbabwe is open for business mantra” that has been the theme song of the Mnangagwa government which took power in a military coup in November 2017.
One would be hard pressed to say how this can possibly attract much needed foreign and even local investment. In a very competitive global market, Zimbabwe clearly does not look very good.
Investors flock to stable and predictable markets which offer the best returns and a guarantee of sound and well thought out policies. The oft Ad hoc and reactionary measures hardly sell the country well.
The government has once again indicated that it is more concerned with political survival rather than the economic well-being of the country.
Industrial Lobby group ZNCC in a paper on the economy and a response to recent government measures encouraged the government to re-think some of its decisions and consult industry as well as civic society, above sticking to sound economic principles which are already in the public domain.
Mnangagwa rose to power on the back of a military coup that was code named “Operation Restore Legacy” and enjoyed a good swim in the ocean of goodwill that was extended by the whole world.
The man, nicknamed “Ngwena”, which is Shona for crocodile; came with a slew of promises which included a break from the past, an end to corruption and opening up Zimbabwe to foreign direct investment.
He however seems to have floundered the opportunity as seen by increased hostilities with the west, with whom he had hoped to re-engage. He recently told the British to mind their own business in response to a British parliamentary resolution to condemn the deteriorating human rights situation in the Southern African nation of 15million.
Before coming to power in 2017 and at the height of the internecine factional wars with the rival G40 faction in the ruling Zanu Pf, Mnangagwa’s supporters claimed that he was a pragmatic and pro-business leader who would drive the economy to growth.
However, after 4yrs at the helm however, the wheels seem to have come off and the economy is hanging precariously as it seems to be headed towards a catastrophic collapse.
The loss of value of the local currency on the official market comes hard on the heels of its sharp slide on the parallel market, where it currently trades at $400zwl to $1USD, down from $350 the previous week.
Industrial lobby groups have advised the government to liberalize the exchange and allow the local currency to derive its value by a market driven price discovery process.