Zimbabwe Business Watch : Week 5
The Stock Market, often a secure destination for investments in these times, suffered heavy losses across the board as money market rates continue to firm. Banks are struggling to pay their statutory reserves and inter bank relations are causing problems. Generally the flow of money is bogged down as the system cannot cope with such huge volumes. This means that more and more money is trapped in the system and this is denied to the intended receiver who requires it for business to continue. Added to this, the ZD depreciated rapidly last week gobbling up cash which is having a very negative effect on the pace of business transactions.
The RBZ is maintaining its bullying tactics and business leaders are being told to report to RBZ Harare within 24 hours in some cases to explain themselves. This behaviour shows little or no regard for the cost and inconvenience to the business community.
This is a weak attempt to defy gravity and force down inflation by interfering with the process of supply and demand which ultimately determines the rates of exchange. Power outages have resulted in communications breaking down and one Internet Service Provider went off air as they had run out of diesel for their generator. The economy is now running at 1947 levels.
