Zimbabwe Business Watch : Week 21
This week commenced with some banks offering an inter-bank rate of 300 million to 1. The spread is as wide as 274 to 304. This compares with the OMIR at 293.
On the basis of these figures, the ZWD is devaluing by around 8% per day and has experienced depreciation at a rate as high as 12% per day.
What is apparent is that the mechanisms of government, such as the Gold Support Price Scheme, cannot keep up with inflation and consequently big disparities are appearing in the system.
In a vain attempt to address the shortage of cash, RBZ has introduced a new 500 million (billion) bearer cheque and special Agro cheques for farmers in denominations of 5, 25 and 50 billion.
It was only last week that the country had sight of the first 250 million bearer cheques. Businesses in general are battling to gear themselves to hyper inflation and modification of financial management and business practice is almost a daily affair.
There is every possibility, in a suspicious absence of statistics, that inflation is now well over 500,000% and rapidly heading towards 1,000,000%.
The fair value rate of the Hard Boiled Egg Index sits at 280 million to the USD and this, for all intents and purposes, presents a picture of the real value of the Zimbabwean Dollar.
Export industries continue to be stranded by lack of inputs due to virtual seizure of their foreign currency accounts.
May 20th, 2008 17:30
It’s my opinion that RGM and his cohorts are desperately salting away as much FOREX as they can before the shit hits the fan. They have abandoned any pretense at managing the economy and are preparing an exit strategy. Lets help them. I’m willing to contribute.!!!!!!
May 20th, 2008 18:44
Fish eagle you may be right. No economist I have spoken to can explain why they floated suddenly and why they have suddenly started paying international debts.
Sokwanele - did I spot you guys on Twitter. I find it curious that Zimbos in the diaspora are so disorganized.
It might be an idea for you guys to blast way on twitter which would relay out to everyone who is following you - particularly in the lead up to June 27.
May 21st, 2008 05:21
If the Z$ depreciates at 8% per day, then after one year it will be worth 0.92 to the power 365, which is 6.0611772032e-14, which means that, at the end of the year, what costs $1 today will cost $16,498,445,210,914.1, which is 1,649,844,521,091,310% inflation, a long, long, mind-boggling way off your 1,000,000%!