The Central Bank’s key rate has briskly crossed 200% and the Zimbabwean dollar has lost 72% of its value against the dollar in 7 months
1 USD = 361.9 ZWD] Zimbabwe sees its inflation rate peak at 256.9% in July against 191.6% in June. The former Southern Rhodesia, freed from Apartheid by Robert Mugabe in the early 1980s, is once again sinking into a sad, tailor-made role of countries with the highest inflation in the world, ahead of Venezuela, Sudan and Yemen. This acceleration worries the business community and weakens the balance sheet of the Minister of Finance, Mthuli Ncube (photo), who had managed to overcome hyper inflation (which had earned him the nomination among the five best African Ministers of Finance). Economy and Finance) which was 558% when he was appointed four years ago.
Today everything seems to be redone with a key rate of the Central Bank (Reserve Bank of Zimbabwe) exceeding 200% against 80% at the beginning of the invasion of Ukraine by Russia. This aggressive measure, added to the launch of gold coins since July 25, intended to reduce the quantity of local currency in circulation, was not enough to break the spiral.
As a reminder, in 2008, the central bank had to issue a note of a trillion Zimbabwean dollars. At the time, inflation which reached 489 billion percent was caused by the failure of land reform and the embargo decided by the West which accused the ruling party, ZANU PF, in power since 1980, of tampering with the elections. The country even had to abandon its currency in 2015 to adopt the US dollar. The Zimbabwean dollar, reintroduced in 2019, is not yet popular with private sector players who think above all of protecting their income in safer currencies. In 2022, inflation is the consequence of the Ukrainian crisis. But yesterday as today, households and economic agents in general are converting their assets into US dollars, accelerating the fall of the local currency and amplifying the shortage of foreign currencies.
According to the national statistics agency, the Zimbabwe National Statistics Agency, the inflationary spiral is fueled by external factors and a volatile exchange rate between the national currency and the dollar. Between January and July, the inflation rate fell from 60.7% to 256.9%. Enough to weaken the power of President Emmerson Mnangagwa, who defeated Mugabe during a political coup in 2017, but threatened by popular anger. In March, his party (Zanu-PF) saw its power seriously reduced by the breakthrough of the Citizens’ Coalition for Change (CCC), a barely formed opposition party.