Zim Dollar continues to slide

By Lance Guma
14 September 2005

The Zimbabwe dollar continued its downward spiral with reports that the official rate has plunged by 6 percent from last week. The fall did not come as a surprise given announcements in the week of a rise in inflation figures which officially are now pegged at 265,1 percent. The frightening dimension though is how different the black market rates are from the official figures.

One pound will buy you 84 000 Zimbabwe dollars, almost double the official rate government is using on its foreign currency auction floors. The 6 percent devaluation is an attempt to play catch up with the black market rate. But some analysts believe it is part of an agreement with the International Monetary Fund who want market driven exchange and interest rates.

The black market rate, however, continues to gallop away from official rates and the situation remains hopelessly complex. Interest rates have also gone up three times in the last two months and the outlook for the country remains even more bleak.