The Zimbabwean Dollar has kicked off 2024 by falling over 40% on the parallel market as elevated demand for foreign exchange continues to exceed supply.

Factors including weaker global commodity prices and the end of tobacco sales have impacted US Dollar inflows into Zimbabwe, resulting in its exchange rate spiralling, says Persistence Gwanyanya from the central bank's monetary policy committee.

As it stands, Zimbabwe acquires 85% of its foreign exchange from mining.

"Even this quarter, our situation will not have got to normal," Gwanyanya said during an interview earlier this week.

"We will need to manage the demand side, that is deal with the demand for forex and judiciously allocate resources," he went on to add.

Since it returned to circulation in 2019, Zimbabwe has been struggling to stabilise its currency. This led to an increased usage of the US Dollar over the local Dollar, Bulawayo 24 News reports.

A number of interventions by the Treasury back in June, such as a demand for businesses to pay their taxes in local currency, helped to stabilise the exchange rate.

Furthermore, authorities have cited exchange rate volatility as a key factor in fuelling inflation. Consumer prices rose 26.5% in December compared to the year before, accelerating for the second straight month.

On Monday this week, the local Dollar was changing hands at Z$10,900 per US Dollar, according to ZimPriceCheck.com. This is considerably weaker than the official exchange rate of Z$6,467 per US dollar.

The weekly auction run by the central bank, the official source of USD for businesses, was closed in December for the holidays.

Gwanyanya added that due to the recent depreciation, the "equilibrium has been disturbed", as the divide between official and unofficial markets surpasses the 10% to 20% range established by authorities.

"We will now be seized with re-establishing the equilibrium," he concluded.