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Hard currency just got a whole lot harder to get in Zimbabwe

 

Despite the warnings, illegal currency dealers continue to trade on Harare’s streets, albeit more discretely than usual because of plain-clothes police lurking in the shadows.

“This is the only way I can look after my family. But it will now be difficult to trade openly like we used to do,” said currency trader Theresa Chirwa, glancing over her shoulder as she shoved a wad of bond notes and dollars into her satchel.

Assessing the true value of zollars is difficult but economists have revived a gauge used during the hyperinflation era – the Old Mutual Implied Rate – which compares share prices of the Old Mutual insurance firm traded in Harare and London.

As the central bank rumours swirled last month, the premium for Harare shares over their London counterparts surged, meaning Zimbabweans need far more of their electronic dollars to buy the shares than someone in London using ordinary US dollars.

Besides trying to get their hands on hard cash, Zimbabweans are also converting zollars into tangible assets such as cars or property, or piling into the stock market in the hope shares will hold value even if their bank balances are obliterated.

As a result, Zimbabwe’s main stock index, the ZSE Industrial , has surged 77 percent in the last month to a record high of 433 this week. The index has tripled so far this year.

“I‘m investing in equity funds – hopefully that should give me some value for my money,” said Nkosi, the computer technician. “We don’t know what tomorrow holds.” –The Source

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