Traders on Zimbabwe's foreign exchange black market have hammered the currency sharply lower in anticipation of a devaluation by the Reserve Bank of Zimbabwe, which has held the official rate at Z$250 since it overhauled the currency in July 2006.
Economist Eddie Cross circulated an e-mail report Monday saying traders in Bulawayo reported the U.S. dollar surging to Z$4,200 as the South African rand fetched Z$560 and Botswana's pula traded at Z$600. Cross, an opposition activist, predicted the currency's sharp fall augured "a further round of general price increases."
RBZ governor Gideon Gono was expected to schedule a monetary policy update soon and observers looked for him to adjust the bank rate to US$1,000. But businesses are urging a more significant devaluation to Z$1,750 per greenback that would increase local currency revenues from export sales and bolster enterprise viability.
Economist and University of Zimbabwe Professor Tony Hawkins told reporter Blessing Zulu of VOA’s Studio 7 for Zimbabwe that black market currency traders are refusing to sell hard currency until Gono tips his hand, sending U.S. dollar rates higher.
Zimbabwe is in its seventh year of recession and annual inflation surged to 1,281% in December, another record high for the country and the highest in the world.
Critics of President Robert Mugabe and his ruling ZANU-PF party blame the country's steep economic decline on the government's economic policies, particularly the land reform program it launched in 2000, as well as official corruption. But Mr. Mugabe says Western sanctions have brought the country to its present pass.