Zimbabwe Stock Exchange Suspends Operations To Protect Local Currency
The Zimbabwe Stock Exchange suspended trading on Monday due to speculation that the government said precipitated the fall of the national currency, another episode in the country’s endless economic downturn.
“Pending further instructions from our regulatory authority, we inform traders that trading has been suspended until further notice,” Zimbabwe Stock Exchange (ZSE) boss Justin Bgoni said 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.
On Friday, the government announced measures to “deal with embezzlement, crime and economic sabotage”, including the suspension of stock market and cell 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 of the greenback against the local currency, officially set at 57 Zimbabwe dollars, has gone down to 100 because of these practices, according to 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.
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.
The authorities “now want to identify those who carried out these operations,” commented for AFP the economist Daniel Dhlela, of the Zimconsult cabinet, suggesting high ranking accomplices.
The suspension of trading on the stock market was greeted with concern by analysts.
– “Reopen quickly” –
“This is one more blow to the economy, the consequences of which no one can predict in the long term,” said Prof Tony Hawkins, economist at the University of Zimbabwe, “it will cause uncertainty and affect negatively investor confidence. “
“Not opening the purse is dangerous, they must reopen it quickly,” said Dhlela.
The suspension of telephone transactions, which have become the main means of payment in shops due to the scarcity of cash, prompted mixed comments on Monday in the streets of the capital.
The agents who lived on these services “will be left without a source of income,” Harare resident Beavan Chirime told AFP.
“We ordinary people have nothing to lose” with the suspension, said another, Wright Chirombe. “Some of these agents were linked to the bourgeoisie and took advantage of it to invest large sums of money in illegal currency transactions.”
Annual inflation has peaked at 785.6%, according to the latest official statistics.
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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