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Mnangagwa Appoints New Central Bank Governor Amid Concerns Over High Inflation, Crumbling Zimbabwe Dollar – VOA Zimbabwe

President Emmerson Mnangagwa has appointed top-ranked banker, John Mushayavanhu, as the new governor of the central bank, almost a month before the end of John Mangudya’s term of office.

Announcing the appointment in a government gazette on Thursday, Finance Minister Mthuli Ncube said Mnangagwa appointed the new governor in terms of the Reserve Bank of Zimbabwe Act (Chapter 22:15) for a period of five years ending in March, 2029.

Mnangagwa initially announced Mushayavanhu’s appointment in December but could not immediately take over the post due to Mangudya’s delayed departure.

Mushayavanhu, with over 30 years of experience in the banking sector, declined to comment on his appointment and Mangudya was unreachable as he was not responding to calls on his mobile phone.

The new governor is expected to announce his policy measures to contain rising inflation and depreciating Zimbabwe dollar. A United States dollar was on Thursday fetching up to ZWL$42,000 on the black market and just over half of that amount in the official money market.

High inflation has resulted in serious macro-economic instability in Zimbabwe with spiraling prices of basic commodities and depressed industrial capacity production, negatively affecting millions of people.

Writing on X, formerly Twitter, Deputy Finance Minister Kuda Mnangagwa said a surge in the exchange rate was linked to speculation on the RBZ’s Monetary Policy Statement, expected to be announced within the next few days.

Mnangagwa said, “We have been receiving enquiries about the surge in the exchange rate, which right now can be attributed to the anxiety and anticipation of the upcoming Monetary Statement that is around the corner. If I were to irresponsibly give unsolicited advice, I would urge Zimbabweans with their hard-earned ZWL not to hedge against it. Government is committed to ensuring that there will be no loss of value through the introduction of currency stabilization measures.”

Economic commentator Rejoice Ngwenya of the Common Market for Liberal Solutions said Mushayavanhu is expected to come up with prudent monetary policies that would curb high inflation and a further depreciation of the value of the Zimbabwean dollar.

“He should not follow quasi-fiscal policies being touted by the ruling party because that spells disaster for the country. He is a professional banker who is expected to use his wide experience in stabilizing the inflation rate and crumbling local dollar. Otherwise, he may end up looking like a driver of a vehicle without fuel.”

Business executives are also livid over Mushayavanhu’s appointment with some noting that Zimbabwe needs to fix the country’s economic fundamentals first before thinking of curbing galloping inflation and depreciating local dollar.

“All we need,” said top businessman and Nyamandlovu farmer Japhet Mpofu, “is high production levels supported by availability of electricity.”

Mpofu, a former hotelier, said most businesses need state support in terms of getting adequate electricity and other necessary infrastructure.

“At the moment some of us have ended up installing solar energy in an effort to tackle power issues and in some cases it’s not possible to depend on electricity as power switched off anytime. This is very bad for businesses. We have come up with other ways of surviving under these difficult times. The basic thing we need to do as a country is to produce goods for big national and international markets and this can only be done through government support in providing energy and having good monetary policies.”

Zimbabwe is one of the largest producers of gold, diamonds, platinum and other minerals.

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Investors brace for turbulence as ZSE shifts to new currency – The Zimbabwe Mail

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ZIMBABWE Stock Exchange (ZSE) investors were this week bracing for shocks, as the bourse realigned with the new currency regime, following the introduction of a new currency on Friday that sparked market mayhem.

According to analysts at Inter Horizon (IH) Securities, valuation distortions were expected to initially unsettle markets, as they find their feet under a structured currency called ZiG, which came into effect on Friday last week.

IH did not predict how long jitters would pummel investors, as questions arise about the sustainability of a new currency.

But it said investors should seek refuge in counters offering dividend pay-out assurances.

After the ZSE’s All Share Index (ALSI) was rebased to 100 points during a drama-filled Monday to mark the first day of trade in ZiG, it gained 0,23% on Tuesday to close at 100,23 points.

In a way, IH’s predications were backed by FBC Securities, which said on Tuesday the first two days of the transition had been characterised with “thinned volumes”.

Authorities have launched a blitz to punish companies that were rejecting the Zimbabwe dollar ahead of ZiG’s launch on April 30, further confirming the depth of market uncertainties.

Friday’s announcement to launch ZiG presented new central bank governor John Mushayavanhu’s first bold step to tackle a currency crisis that has frustrated markets for 24 years.

He hoped the currency, which is backed by gold and a war chest that authorities said was enough to defend the domestic unit, would stand its ground.

The Zimbabwe dollar lost 800% of its value in 2023.

It had surrendered a further 74% by the end of the first quarter, according to IH.

“The ZSE will need to rebase to the new currency, which may result in initial distortions in valuations,” IH said in a dispatch to investors on Monday.

“The uncertainty around performance of ZiG compels us to lean more towards defensive stocks with strong dividend policies in case valuations remain distorted, impacting capital gains. In our IH universe, presenting high dividend yields are Delta (6,7%), Sambisa (5,2%) and Axia (11,2%),” it said.

In a market update released before markets kicked off under a cloud of uncertainly on Monday, the ZSE said it had recalibrated in line with Reserve Bank of Zimbabwe (RBZ) directives, converting the currency at an exchange rate of ZiG1 to ZW$2 498,7242.

It meant that as other markets battled to come to terms with the new reality, the ZSE was one of the earliest institutions to comply.

“All share prices will now be denominated in ZiG, therefore, the opening prices for the trading session effective (Monday) 08 April 2024 will reflect the ZiG currency,” the ZSE noted.

“For ease of reference, all prices will be shown in ZiG cents (ZiG price multiplied by 100).

“The price sheets for all ZSE boards, namely the Equity Board, REIT Board, and ETF Board, will be available and distributed in ZiG currency going forward.

“As stated above, for ease of reference, all prices will be shown in ZiG cents (ZiG price multiplied by 100),” the updated added.

On Thursday, Mushayavanhu had moved to calm markets through an assurance that cash piles and gold reserves were in place at the RBZ to defend the structured currency.

He spoke after inviting President Emmerson Mnangagwa to conduct a physical inspection, as he officially took over from outgoing governor, John Mangudya.

Friday’s monetary policy recalibration followed a tumultuous first quarter for the domestic unit, which also surrendered 70% on the black market.

IH sees Mushayavanhu’s measures as meant to boost demand for the local currency, “with the aim to re-anchor price and exchange rate stability and re-monetise local currency as a reliable medium of exchange and store of value”.

“The economy has been moving towards full dollarisation, with over 80% of transactions conducted in US dollars as reduced confidence in the ZWL (Zimbabwe dollar) dwindled its market share.

“Businesses are predominantly funding themselves in foreign currency, evidenced by the high proportion of foreign-currency-denominated loans in the banking sector.

“In our view, these new measures reflect efforts to preserve the current status quo in terms of the multi-currency regime and are unlikely to interfere with functioning of other currencies as they affect roughly 20% of money supply.

“The lack of further interference with foreign currency retention ratios for exporters is critical given the vulnerabilities posed by the ongoing drought and falling commodity prices.

“The requirement for 50% of quarterly payment dates (to tax authorities) to be in ZiG creates steady demand for ZiG, which should theoretically strengthen it. We, therefore, expect a relatively stable US$:ZiG rate for as long as ZiG remains anchored,” IH said.- ZimInd

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ZSE rebases bourse to reflect ZiG – The Zimbabwe Mail – The Zimbabwe Mail

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THE Zimbabwe Stock Exchange (ZSE) is re-basing all its indices following the introduction of a new currency, Zimbabwe Gold (ZiG), last week.

ZSE said all the ZSE indices would be re-based to 100 basis points.

“The re-basing is necessary to allow the indices to accurately reflect the performance of the market in the context of the new currency ZiG,” the bourse said.

ZSE has also revalued the Zimbabwe dollar-listed stocks into ZiG, in line with announcements made in the 2024 Monetary Policy Statement.

Following the release of the new monetary policy measures, ZSE revalued all the listed stock converting the market capitalisation of ZWL$73 517 828 598 027 to ZiG29 422 146 148.833. The conversion was based on yesterday’s exchange rate of ZiG1:ZWL$2 498.7242.

With this conversion, British American Tobacco Zimbabwe has the highest price at ZiG2 601,305 per share followed Delta Corporation Limited (ZiG680,3761), Cafca Limited (ZiG621.3121), and CBZ Holdings (ZiG396,728).

“The trading adjustments on the ZSE will be converted at the initial conversion exchange rate of ZiG1 to ZW$2498.7242 which is prescribed in the operational manual for structured currency issued by the RBZ on 5 April 2024,” ZSE said yesterday.

The bourse said the opening trading price for all share would now be denominated in ZiG, with opening prices for the trading session effective April 8, reflecting the ZiG currency.

“For ease of reference, all prices will be shown in ZiG cents (ZiG price multiplied by 100). The price sheets for all ZSE boards, namely the Equity Board, REIT Board and ETF Board will be available and distributed in ZiG currency going forward,” ZSE said.

“As stated above, for ease of reference, all prices will be shown in ZiG cents (ZiG price multiplied by 100). All daily market reports of the ZSE will now be presented in the ZiG currency,” the bourse said

ZSE said all outstanding local currency settlements as at April 5 would be payable in ZiG and converted at the initial conversion exchange rate of ZiG1 to ZWL$2 498,7242 which is prescribed in the operational manual for structured currency issued by the RBZ on Friday.

ZSE said that all future settlements from April 11 would now be in the new currency.

Source: News Day

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ZWL/USD: Zimbabwe’s Currency ZiG Strengthens on 2nd Day of Trading – Bloomberg

Zimbabwe’s new gold-backed currency the ZiG strengthened a day after its debut, even as it roiled commerce nationwide as banks, retailers and utilities battled to switch to the new unit.

It gained 0.2% to 13.53 per US dollar, according to data published on the Reserve Bank of Zimbabwe’s website on Tuesday. It began trading Monday at 13.56 per dollar, using an exchange rate announced by Governor John Mushayavanhu during last Friday’s unveiling of the nation’s latest effort to create a functioning local currency.

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