Zim Dollar gains as demand increases.
Nevanji Munyaradzi Chiondegwa
The recent interventions by the Ministry of Finance and Economic Development have arrested the freefall of the local currency against the United States Dollar with positive gains recorded today and yesterday.
On Friday the local currency had traded at 6 949.14 on Friday and Monday fell to 6369.97 by Tuesday with economists predicting a further fall as the government demands taxes in local currency.
The gains by the Zimbabwean Dollar comes amid demand by the Ministry of Finance and Economic Development to have tax remittances paid in the local currency.
This has seen a high demand for the Zimbabwean Dollar as companies sought to pay their tax obligations which became due on the 25th of June. Companies that had been holding on to their USD and had offloaded the ZWL at a higher rate are now being forced to liquidate their foreign currency at the official rate to meet their tax obligations in the local currency.
This has resulted in an increase in the supply of USD on the market at reduced demand for USD leading to a fall in the price of the USD both on the official and parallel market. The fact that the market is not very liquid in local currency will work to further strengthen the local currency as the laws of supply and demand kick in.
Commenting on the increased demand of the local currency on Twitter, Permanent Secretary in the Ministry of Information, Publicity and Broadcasting Services, Mr Ndavaningi Mangwana said, “There is a high demand for the Zimbabwean Dollar on the market. Business now trying to get rid of the USD so they can pay their taxes with the coveted ZWL, but it’s a struggle out there. Great interventions@MthuliNcube @Zimtreasury.