Paul Nyakazeya, Group Digital Editor 
ZIMBABWE’S domestic currency will continue to devalue against major currencies due to lack of key reforms and government’s policy inconsistencies, analysts have said.
The Zimbabwean dollar, which was hastily reintroduced last year, devalued by 64 percent over the last month and is expected to weaken further as the tobacco selling season ends and foreign currency inflows dwindle.
“Government policies being enacted at the moment, including the closure of the Zimbabwe Stock Excchange (ZSE), the introduction of a foreign exchange auction system, exchange controls and other such measures have all been tried before between 2003 and 2008,” John Legat, Imara Asset Management (Imara)’s chief executive, said.
“All failed and hence it is hard for the public to believe that this time will be any different without radical economic and political reform, none of which look likely. There remains no confidence in the ZWL and our view is it will continue to devalue both officially and unofficially.”
This comes as the Zimbabwe dollar fell five percent to $72,14 against the greenback on Tuesday at the central bank’s foreign currency auction system.
The Imara boss said such was the loss of confidence in the local currency that the government was forced to pay civil servants an allowance in June of US$75 each on top of a 50 percent increase in their Zimbabwe salaries.
“Whilst this allowance was touted as an interim arrangement meant to last three months, we believe it will be difficult to withdraw once it has been launched. Since we doubt that the government has the US dollar to pay them, the RBZ has stated that civil servants should open a nostro account with their bank into which the allowance will be paid,” he said.
Legat said while banks will refer to these as “nostro FCA domestic” they will not be allowed to withdraw United States dollar cash and will only access the funds using a “US dollar” swipe card in shops paying for goods priced in “US dollar”.
“We can only assume that “USD” equals RTGS dollars as defined in October 2018. Shops will no doubt offer a discount on “USD” prices for USD cash as before if they are unable to convert those monies into real USD to import product,” he added.
“That implies there will be three currencies ― US dollar cash, US dollar swipe (RTGS) and ZWL cash/swipe, presumably with three different exchange rates. The irony of course is that paying civil servants in swipe “USD” further undermines the ZWL as Zimbabwe’s local currency,” he said.
Dephine Mazambani, the Bankers Association of Zimbabwe chief economist, said there was need for real sector reforms to boost confidence in the economy.
“There should be a deliberate focus on confidence building measures, through policy consistency, enhanced transparency, timely publication of macroeconomic data, enhanced accountability and consistent engagement between government and the private sector,” she said.
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