The Confederation of Zimbabwe Industries (CZI) has warned that the Zimbabwe dollar is at “risk” of being rejected if runaway inflation isn’t tamed.
Annual inflation soared in June to 192% — a 13-month high, with the Zimdollar the worst-performing currency in Africa.
The local currency has lost more than two-thirds of its value against the US dollar this year, according to data compiled by Bloomberg.
In a report dated July 5 to its members, CZI also said policy interventions implemented by authorities over the last six months to protect the local currency and arrest runaway inflation have so far failed. It said:
Although year-on-year inflation has been on an upward trend since August 2021, there is a noticeable exponential increase since March 2022 which is threatening to lead to hyperinflation if sustained.
This also means that policy is losing the battle with respect to protecting the local currency as there is a risk of it being rejected in the market.
CZI also warned that surging consumer prices have put businesses at a disadvantage among regional peers.
The business group noted that Zimbabwe’s inflation rate is the highest in southern Africa and almost eight times that of Angola’s, the country with the second-highest rate in the region.