Local currency plummets in Zimbabwe
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As the Zimdollar spreads have shrunk, there have been calls for Zimbabwe to re-dollarize its economy.
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A man holds a five Zimbabwean dollar note on the street in Harare on Tuesday, June 25, 2019. (AP)
Zimbabwean companies and families are worried about a rerun of hyperinflation witnessed more than a decade ago, as prices of essential goods skyrocket following a significant depreciation of the local currency, despite government efforts to strengthen it.
The Zimdollar has lost more than 50% of its value in June against the US dollar, and more than 80% since the beginning of the year after the government announced on May 29 steps to encourage the use of the local currency rather than the dollar in order to combat inflation.
Pride Munjeri, a 35-year-old father of two expressed shock at seeing prices at a local supermarket. He recalled 2008 when the country saw hyperinflation so bad it made the nation abandon its currency in 2009.
Bread currently costs 10,000 Zimdollars ($1.67) when it was just 2,000 Zimdollars a week ago.
Zimbabwe's major stock exchange momentarily paused trading earlier this month to enable the market to "cool off" after equities soared on the back of a falling Zimdollar.
While some merchants have raised local currency pricing, others are operating purely in US dollars to protect themselves from the Zimdollar's depreciation.
Denford Mutashu, the president of the Confederation of Zimbabwe Retailers expressed that it was not possible for merchants to procure goods with the US currency and sell them with the local currency.
As the Zimdollar spreads have shrunk, there have been calls for Zimbabwe to re-dollarize its economy.
According to economists, US dollars already account for 80% of all economic transactions.
Independent Economist Gift Mugano believes the country should re-dollarize, "We are at the graveyard. We are actually reading the last verses before we lower the Zimdollar down the grave."
However, Zimbabwe's central bank governor, John Mangudya, told Reuters that the country did not have enough money to do so again.
According to him, "This is not the end of the Zimdollar," adding that "This country has no capacity to fully dollarize. It is not sustainable."
