Zimbabwe plans new measures to support ailing currency
- Zimbabwe is taking measures to address the depreciation of its currency on both official and parallel markets.
- Finance Minister hints at potential reforms to the central bank's foreign exchange auction.
- Authorities aim to boost the supply of US dollars to stabilize the currency and mitigate economic challenges.
Zimbabwe is set to unveil new measures aimed at addressing the depreciation of its currency on both the official and parallel markets, as reported by the state-controlled Sunday Mail newspaper.
The local dollar has experienced a significant decline, weakening by 32% on the official market and over 40% on the parallel market so far this year, making it the world's worst-performing currency. Finance Minister Mthuli Ncube has hinted at potential reforms to the central bank's weekly foreign exchange auction as one of the planned measures.
Additionally, authorities aim to boost the supply of US dollars in the market, signaling an effort to stabilize the currency and mitigate the economic challenges associated with the steep depreciation. The upcoming measures are anticipated to be critical in addressing the currency's decline and fostering economic stability in Zimbabwe.
The Zimbabwe dollar was reintroduced into circulation in 2019 after a ten-year hiatus. Despite its reintroduction, the American currency is still widely used in 80% of all economic transactions in the country. This dual-currency system reflects the ongoing challenges in stabilizing the local currency. The weekly foreign exchange auction, initiated in June 2020, has played a significant role in providing foreign exchange to local companies. According to the central bank, it has disbursed more than $4 billion through the auction system, showcasing its importance in facilitating trade and addressing the foreign currency needs of businesses in Zimbabwe. Despite these efforts, the challenges in maintaining the stability and value of the Zimbabwe dollar persist, prompting ongoing measures and adjustments by authorities to address the economic dynamics.