This follows previous rates of ZW$4,571.29 on August 21 and ZW$4,573.77 on August 18. The majority of foreign currency obtained from the auction was utilised for purchasing raw materials, followed by machinery and equipment.
While the Zimbabwean dollar has been strengthening against the USD in recent months, this latest development indicates a shift in the trend. Authorities attribute the strengthening of the Zimbabwean dollar to the government’s implementation of measures to stabilise the economy and the local currency. These measures included restricting foreign currency in local transactions, and making the Zimbabwean dollar the sole legal tender for certain domestic transactions like taxes. This resulted in a reduction in money supply in the market. However, this reduction has been viewed by some analysts as intentional hoarding by authorities to create an artificial shortage.
Although the Zimbabwean dollar has shown recent stability, its long-term sustainability remains uncertain. Previous attempts to reintroduce the local currency have been met with limited success due to a lack of public confidence following the hyperinflation experienced in 2008 and subsequent policy changes resulting in monetary losses.
There are predictions that the local currency may further devalue after the recent harmonized elections held on August 23-24, 2023, which saw the ruling ZANU PF party secure victory. The future role of the United States dollar in Zimbabwe’s currency system also remains unclear.
In his inauguration speech, President Emmerson Mnangagwa emphasized the importance of a national currency for development, hinting at a preference for the Zimbabwean dollar as the sole currency. He also expressed a focus on utilising internal resources to foster economic growth. The evolving situation will determine the future direction of the country’s currency system.