Zimbabwe Business Watch : Week 26
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The Zimbabwe dollar crashed dramatically moving from 180 000 to the US$ to as much as 350 000. One side effect of this is the dangerous impact that rapid devaluation has on cash flow as well as cash resources. In the space of just 5 trading days cash requirements have all but doubled and there is a rush on banks to provide the balance. Presently, the Reserve Bank has decreed that no company can issue a check exceeding 50 million dollars and this recent devaluation has resulted in a massive increase in the number of electronic transactions that must take place. The consequence of this is that there is huge congestion in the system and such transactions are taking up to 4 days to complete which, in itself, means losses of up to 15% over that time period. This is directly related to day by day inflation. More and more companies are beginning to “dollarize†in order to protect their companies.
