The business community is warning that Zimbabweans must brace for tough times ahead as the South African rand continues to seesaw, plunging to an all-time low Monday, breaching the 14 to the dollar mark on the back of a global drop in commodity prices.
Pretoria is Harare’s number one trade partner. Last year, exports to Zimbabwe stood at R24.8 billion while Zimbabwe sold about R2 billion worth of goods to South Africa.
AFP reports that the currency of the continent's most developed economy tumbled to 14.0682 against the greenback before midday, an 8.5 percent drop, before it pulled back to 13.33 by mid-afternoon.
The rand has been under sustained pressure lately and is one of the worst hit out of 25 emerging market peers as jittery investors dispose of high-risk assets in the wake of slowing economic growth in China.
South Africa's central bank issued a statement saying it would consider intervening in the foreign exchange market "to ensure orderly market conditions".
Chinese manufacturing activity shrank at its fastest pace in 6-1/2 years this month, compounding investor concerns over slowing growth in the world's number two economy and its potential impact on global growth.
Chief economist of Resource Exploitation Watch, Washington Mehlomakulu, says a weaker rand is bad for Zimbabwe’s fragile economy.
University of Zimbabwe economist, Professor Tony Hawkins, concurs noting that the troubles in South Africa will be felt in Harare.
