Black market traders going out of business as gold coins boost Zim dollar

play article
Subscribers can listen to this article
The new Zimbabwean gold coins.
The new Zimbabwean gold coins.
Reserve Bank of Zimbabwe

Not everyone is happy about the Zimbabwean dollar’s gains.

Black market traders have been left reeling as measures taken by authorities, including new gold coins, to support the embattled local currency dry up excess liquidity and erode arbitrage opportunities.

The gap between the official and parallel market rates has shrunk since the initiatives began in July. The exchange rate on the street for large transactions - more than 1 million Zimbabwe dollars - has rallied to Z$740 for a US dollar from as much as Z$950. For smaller deals, a greenback will cost Z$620 against Z$800 last month.  

"Some traders are already out of business," said Misheck Gore, a dealer who works in the central business district of Harare, the capital. 

The local dollar officially trades at Z$494.98, according to the results of a weekly auction held Tuesday by the central bank.

The central bank sold 4 475 gold coins, generating Z$3.7 billion by Aug. 10, of which 90% was paid in Zimbabwe dollars and the balance in foreign currency, Reserve Bank of Zimbabwe Governor John Mangudya said in a monetary policy statement released on August 11.

Exchange-rate volatility on the parallel market is a major driver of price pressures in the southern African nation where inflation surged to 257% in July. A shortage of foreign currency via formal channels had forced businesses to turn to the parallel market. 

The premium between the official and the street rate, which has more than halved since July, "should begin to fall in the range we see for the rest of Africa at circa 10%," IH Securities, a Harare-based brokerage firm, said in a note to clients dated August 12.

We live in a world where facts and fiction get blurred
In times of uncertainty you need journalism you can trust. For 14 free days, you can have access to a world of in-depth analyses, investigative journalism, top opinions and a range of features. Journalism strengthens democracy. Invest in the future today. Thereafter you will be billed R75 per month. You can cancel anytime and if you cancel within 14 days you won't be billed. 
Subscribe to News24
Rand - Dollar
Rand - Pound
Rand - Euro
Rand - Aus dollar
Rand - Yen
Brent Crude
Top 40
All Share
Resource 10
Industrial 25
Financial 15
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders