Prices of basic commodities in Zimbabwe are soaring following a weakening of the local currency, leading to fears of hyperinflation.
Despite government efforts, the Zimdollar has plummeted more than 50% in value against the US Dollar this month. On 29th May, the government unveiled a series of measures to encourage the use of the local currency, rather than USD, in a bid to curtail inflation.
Since the beginning of 2023, the Zimdollar has weakened over 80%, Reuters news agency reports.
“I went into the supermarket to buy bread and other groceries, but I was shocked to see that prices had gone up. It is like we are back in 2008,” stated Pride Munjeri, a 35-year-old Zimbabwe resident in reference to when the country experienced hyperinflation and was forced to ditch its currency in 2009.
Earlier in June, there was a temporary pause in trading on the country’s main stock market to allow the market time to “cool off” as shares rallied following a weaker Zimdollar, the Reuters report adds.
Although some retailers have increased local currency prices, others are solely using US Dollars to protect themselves from the declining Zimdollar.
“It is not possible for the retailer to procure goods with US Dollar and sell them in local currency,” said the Confederation of Zimbabwe Retailers president, Denford Mutashu.
As fears grow over the weakening local currency, the country has been urged to fully dollarise the economy. According to economists, 80% of transactions within the economy are in US Dollars.
“We need to redollarise. We are at the graveyard. We are actually reading the last verses before we lower the Zimdollar down the grave,” said economist Gift Mugano.
However, central bank governor John Mangudya told Reuters: “This is not the end of the Zimdollar. This country has no capacity to fully dollarise. It is not sustainable.”
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