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Weak Rand, Liquidity Crunch Cause Low Zimbabwe Inflation

  • Jonga Kandemiiri

Most South African companies trading with Zimbabwe now prefer to trade in U.S dollars due to the weak rand. (File Photo)

Most South African companies trading with Zimbabwe now prefer to trade in U.S dollars due to the weak rand. (File Photo)

Tetrad Bank says the liquidity crunch currently gripping Zimbabwe, coupled with a weak South African rand, is the major cause for low inflation levels presently obtaining in the country.

In its weekly report, the bank says the current low inflation levels show that national output is declining due to “low consumer demand from the general populace.”

The report also says most South African companies trading with Zimbabwe now prefer to trade in U.S dollars due to the weak rand.

Tetrad, in the report, urges policymakers to find ways to stimulate economic activity “which relies on capital injection from foreign investors.”

An official with the bank told VOA Studio 7 they always conduct research on the state of the economy for the benefit of their clients.

The latest report put annual inflation for October at an all-time low of 0.59 percent, the first time it is this low since Zimbabwe introduced the multi-currency regime four years ago. It previously was 0.86 percent.

Economist Prosper Chitambara of the Labour and Economic Development Research Institute of Zimbabwe said government must urgently venture into smart partnerships to save the economy since companies are shutting down every week.
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