Zimbabwe Stock Exchange Suspends Due To Currency Speculation
The Zimbabwe Stock Exchange suspended trading on Monday due to speculation that the government said precipitated the collapse of the local currency, another episode in the country’s endless economic downturn.
“Pending further instructions from our regulatory authority, we inform operators that trading has been suspended until further notice,” said Zimbabwe Stock Exchange (ZSE) boss Justin Bgoni in a statement.
Zimbabwe has been stuck since the early 2000s in a serious economic and financial crisis.
After a relative respite a decade ago, the situation has worsened again for two years, with the return of shortages of all kinds (liquidity, fuels, basic foodstuffs, electricity …), against the backdrop of rampant inflation and Zimbabwe dollar depreciation.
In a statement released on Friday, the government announced a series of measures to “deal with embezzlement, crime and economic sabotage”, including the suspension of stock market and mobile phone transactions.
Its information secretary Nick Mangwana notably called into question a “flourishing black market of currencies” which made fall, according to him, the value of the Zimbabwean dollar compared to the American dollar.
The exchange rate for the greenback against the local currency, officially set at 57 Zimbabwe dollars, has shrunk to 100 due to these practices, said Mangwana.
The government “has irrefutable information (according to which) the system of transactions by telephone takes part deliberately or fortuitously, with the assistance of the stock exchange of Zimbabwe, in activities which sabotage the economy”, had added the official.
– Hyperinflation –
Due to the scarcity of liquidity, most of the transactions, particularly purchases in shops, are made by telephone.
The speculation “feeds the rising prices of goods and services that are disrupting the economy and causing hardship for the people of Zimbabwe,” said Mangawna.
Annual inflation has peaked at 785.6%, according to the latest official statistics.
The price of a loaf of bread has almost doubled in a few weeks, from 38 Zimbabwe dollars in May to 61 (0.7 to 1.1 US dollars) today. The 10-kilo bag of cornmeal now sells for Zimbabwe dollars 320, up from 250 in May.
Last Wednesday, the price of fuel at the pump soared by almost 150%.
Combined with recurrent drought for several seasons, the return of hyperinflation has placed half of the country’s 15 million inhabitants in a situation of food insecurity, according to the UN.
President Emmerson Mnangagwa succeeded Robert Mugabe, in power for thirty-seven years, in 2017, pledging to revive the economic machine. His promises have not been kept.
In a speech recently made to officials of the ruling party, Mnangagwa also accused “political detractors” whom he did not name, accusing them of a “harmful project”.
The outlook for the Zimbabwean economy was further clouded with the Covid-19 pandemic. The World Bank is already counting on a 10% contraction in gross domestic product (GDP) in 2020.
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