Financial Gazette (Harare)
6 December 2008
Harare — THE troubled Zimbabwe dollar lost a massive 86,67 percent against major currencies last week in a reflection of the effects of the worsening economic conditions in the country.
In its weekly report, FBC Securities said during the week ending November 28, the local currency had continued with its freefall but was saved by the intervention of the Reserve Bank of Zimbabwe (RBZ) that began cleaning the mess on the Zimbabwe Stock Exchange (ZSE).
Investigations by the RBZ two weeks ago revealed underhand dealings between some stockbrokers, banks and the ZSE that had led to massive increases of stock sales that were not supported by bank balances.
"The interbank foreign exchange market continued to be a true reflection of the worsening socio-political and economic developments on the ground," FBC Securities said in the analysis of developments on the market last week.
"The Local currency receded by 86,67 percent against world major currencies. However, due to the new measures introduced on the local bourse, which saw trade going into a period of stagnation, the Zimbabwe dollar firmed by 3,76 percent at the (Old Mutual Implied Rate)."
As part of a cluster of new measures introduced by RBZ governor, Gideon Gono, aimed at curtailing rampant speculation at the ZSE, the central bank boss said:
"Any company or stock-broking firm which writes cheques that are not funded will have their accounts frozen and closed. Such company or stock broking entities will be automatically blacklisted and cannot operate bank accounts in Zimbabwe."
This scared banks from releasing the non-funded cheques to punters at the ZSE, a situation that has led to a semblance of order on the bourse.
FBC Securities said during the week under review, the cash rate declined by 33,33 percent closing at $2 million to the greenback.
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