Harare - Here it is: the first hint that Zimbabwe's bond note to US rate is about to start moving. And not in a good way. A worsening...
Harare - Here it is: the first hint that Zimbabwe's bond note to US rate is about to start moving. And not in a good way.
A worsening forex squeeze since the introduction of Reserve Bank Chief John Mangudya's bond notes in November last year mean that there is "a recipe for exchange rate pressure between bond notes and the dollar", Zimbabwe's Standard newspaper is reporting.
Mangudya and President Robert Mugabe's government insist the bond note to US exchange rate is 1:1.
It has been, largely, in the last two months.
News24 Correspondent
But as forex in the official market dries up as companies that depend on imports find they're not able to send money out of Zimbabwe, there are real fears the black market will re-emerge, sending the value of the bond note plummeting and taking Zimbabwe back to the days of hyperinflation seen from 2006-8.
Few Zimbabweans are willing to speak on the record about this, understandably.
The Standard quoted an unnamed economist as saying: "If you are desperate, you will buy the dollar at a higher exchange rate."
Black market
There have been worrying signs. Without explanation the central bank introduced the 5 US bond note last week, instead of next month as had been promised.
When the bond note was first brought in, the central bank said the amount of the paper currency that individual Zimbabweans would have in their possession should never exceed 19 US and so there would be no opportunity for the black market to resurface.
That's just not happening: if you are lucky enough to get cashback at a major retailer, your 40 US will likely comprise 30 US worth of bond notes, News24 saw last week.
And in yet more evidence of things getting tighter, Standard Bank Zimbabwe has just informed its clients they can't use their Visa cards when they travel outside the country.
 |
| Is Zimbabwe's Bond Note About To Crash? |
Bank cards
Commenting on Twitter on these worsening shortages, prominent law lecturer and commentator Alex Magaisa said it was "foreseeable". He referred to Gresham's Law, which says that bad (or less valuable) money eventually drives out good (or more valuable) money.
At the moment "banked" Zimbabweans - and that is by far from most of the population - rely on bank cards to pay bills and supermarkets. If the black market for USD reemerges in a big way, that may no longer be an option.
US-based Professor Steve Hanke, who monitored the dizzying freefall of Zimbabwe's dollar in the pre-2008 era, has warned that bond notes will likely suffer the same fate.
What he's seeing now simply confirms his predictions. He tweeted on Tuesday: "Reserve Bank of Zim's bond notes are a joke."
Many Zimbabweans already know that. www.news24.com
- Advertisement -
- Advertisement -
The information is provided by PaHarare Exptreme using online sources and while we endeavour to keep the information up to date and correct, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to the website or the information, products, services, or related graphics contained on the website for any purpose.
Any reliance you place on such information is therefore strictly at your own risk.
- Advertisement -
