Zimbabwe may witness currency crackdown, warn experts

Last updated on October 15th, 2021 at 07:34 am

Zimbabwe – A report by a reported financial institution warned Zimbabwe of a crackling economy in the coming months. The African nation’s economy is continuously falling and there are lingering dangers especially after the US dollar is being proffered over the local currency to make transactions.

The country’s main business group announced on Wednesday that they are projecting a crackdown on black market currency trading and they also took the matter to the members of the group.

“The greatest risk facing the economy right now is an inappropriate policy response to the rising parallel market premium,” said the business group. Zimbabwe’s currency has been struggling for three years and now with the recent controversy involving the arrest of foregn currency traders over black market involvement has worsened the matter.

The situation in which the nation might be stepping into should not be neglected considering the organisation which has revealed the details. The Confederation of Zimbabwe Industries (CZI) is not only the largest representative body for business in the country, it also is one of the most trusted organisations.

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It also said that despite it earlier criticising the government for criminalising firms and traders, the government went ahead with the decision and now it has to bear the cost. The official from the financial firm also stated that they have advised other ways to tackle issues.

The letter that was released by the organization on Monday also stated that the nation does not have any formal market that is viable in nature and despite this if the government clamps down the informal foreign exchange trading, it will have a major impact on the economy.

The value of Zimbabwe’s currency has come to 88 for a US dollar on the official market, which is a huge jump from 2.5 dollar in February 2019. When it comes to trading, the value is further lower as it is traded at 170 to counter the dollar on the black market. CZI stated that the weekly currency auction system which was introduced last year should have been stopped as it is no longer applicable and efficient. The whole process takes 15 days instead of the intended two days to allot the forgn exchange. This long duration of holding the money is hampering the growth of business in the country.