Exporters call for devaluation

HARARE - Business in Zimbabwe is urging a devaluation of the local currency against the greenback when the Reserve Bank governor announces a new monetary policy before the end of the month. Exporters insist that the current rate of $250 to the US dollar is unviable. On the paral

lel market the dollar is trading above $3000 to the US dollar.
Depressed investment interest rates and high inflation (1098,8%) powered the stock market’s key industrial index to fresh record highs at 633 391,06 points last Friday, as rioting stock prices doused any monetary policy scares after opening the year at 569 984,08 points.
Minings, however, plunged deeper into misery, as the index slid a mammoth 6,5% to 347 321,73 points from 354 464,10 points at the opening of trade this year, as profit takers locked in rich pickings from earlier gains.  The stock market’s annual turnover for 2006 rose sharply to US$767,2 million (or Z$191,8 billion), about 1 100% up on 2005 numbers at US$64 million (or Z$6,4 billion).  Total market capitalisation surged to $6,7 trillion from just under $200 million in 2005. The money market would in January receive more than $30 billion in Treasury Bill and CPI coupon bond maturities.
The total amount of maturities would be $34,031,296,666.51 of which $14,617,537,807.79 would be CPI coupon bond maturities.  January was likely to be liquid from various cash deposits and civil servants salaries before taking a slight dip mid month due to tax payments.  The money market had opened the year $14,3 billion down and was forecast to end $4,7 billion in deficit due to cash deposits from commercial banks and building societies.
As a result 90 day NCDs and Bas were being quoted at 70% and 100% respectively, with call rates ranging between 3% and 5% while the interbank was 15%.
The RBZ was on the market with two 365-day treasury bill tenders and the first was subscribed to the tune of $4 billion with $3 billion being allotted at 325%.
The highest bid was 400% and lowest 300%. The second tender attracted $1 billion which was fully allotted at 337,5%. The highest bid was 340% and lowest 335%.
The first week of the year saw commercial banks hiking their minimum lending rates in a bid to put a damper on speculative borrowing.  High borrowing rates have long been used as a way to smother consumptive and speculative borrowing by investors.
MBCA Bank was the first to announce that it was increasing its Minimum Lending Rate to 500%.
The first week of the year saw financial institutions increasing the minimum thresholds for investments as they strive to find optimal returns for investors in the year 2007.
Hyperinflation has meant that the return on smaller amounts invested is minimal, as brokerage costs will take up most of the gains.  It is also to the advantage of investors if they can set aside bigger sums of money as gains on such amounts as $9 000 are no longer sufficient to buy even 2 kg of rice.
Kingdom Stockbrokers increased its minimum investment in shares to $300,000 per counter. Kingdom Asset Managers and Unit Trusts have now hiked their minimum investment levels to $50,000.
Money market investments now require at least $500,000.  The National Social Security Authority (NSSA), increased pension benefits under the National Pension Scheme with effect from January 1, as it seeks to align benefits with changes in the macro-economic environment.  The reviews are for the retirement, invalidity, survivors’ and funeral grant schemes which fall under the pension scheme.
Monthly benefits for the retirement scheme have more than doubled from $5 000 effected in July last year to $12 900, while beneficiaries under the invalidity and survivors’ schemes would get $5 700.  The funeral grant has been increased to $65 000 from $25 000.  NSSA has also reviewed upwards the Insurable Earnings Ceiling from $50 000 per month to $130 000.
Employees earning below $130 000 would have their contributions based on 3% of total earnings, of which the employer would contribute at least half of the total.
The Reserve Bank further extended the curatorship period of Royal Bank and Trust Bank from December 31 to March 31, 2007 to enable the finalisation of their cases before the courts.

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