 Indications are that the US dollar is now trading at $5,5 million, Rand $1 million and Pula $1.1 million on the parallel market.
Last week the US$ was trading around $4 million and rand $3,5million.Analysts have attributed the depreciation to the new cash withdrawal limits of $500 million introduced last week by the central bank.
Depositors now prefer to hold their cash given the inflationary environment and difficulties of withdrawing their cash in the past three months.Â
 To hedge the value of their cash, individuals have therefore resorted to the forex market creating buying pressure.Â
The hiking of minimum investments by stockbrokers and fund managers has also contributed to the flight to the parallel market as few investors want exposure in unit trusts.Â
Meanwhile the Zimbabwe dollar has been appreciating on the fair value market (Old Mutual Implied Rate) due to the weakness in the Old Mutual Price on the ZSE.Â
The decline in the counter’s share price on both the LSE and JSE has failed to offset the appreciation.
It now looks certain the OMIR and the parallel market rate are now set to converge. It remains to be seen however, if the OMIR will trade at a discount to the parallel market rate as has been traditionally the situation.Â
We however anticipate that the parallel market will self correct following this steep rise in rates
Post published in: News