RBZ Forex Auction: Zimbabwean Dollar Continues To Lose Value Against The United States Dollar
The Zimbabwean dollar continues to lose value against the United States dollar, as reported by the Reserve Bank of Zimbabwe (RBZ) in its recent Foreign Currency Auction. The exchange rate on Tuesday was ZW$5,903.3898 per USD, compared to ZW$5827.7972 per USD recorded on December 5, 2023.
This depreciation of the Zimbabwean dollar has been ongoing since its reintroduction in June 2019, following a period of hyperinflation that led to its abandonment for ten years. The continuous devaluation of the currency has resulted in macroeconomic instability, characterized by high inflation rates.
To address the collapse of the local currency and stabilize the macroeconomy, the government implemented various measures. One such measure was making it mandatory for certain taxes to be paid in Zimbabwean dollars, aiming to create demand for the currency and maintain its value. However, economists, like Tinashe Murapata, argued that this demand was only superficial.
Unfortunately, these measures have not yet yielded the desired results, and the economy remains unstable. There are concerns that the situation may worsen in the coming year. Nevertheless, the government assures the nation that it is taking necessary steps to prevent a further deterioration of the economy.
The continuous depreciation of the Zimbabwean dollar against the US dollar raises concerns about the purchasing power of individuals and businesses, as well as the overall economic stability. It highlights the need for effective measures and reforms to address the underlying issues and restore confidence in the local currency. The majority of workers, particularly government workers are paid in Zimbabwean dollars which means inflation will erode their incomes.
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