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Zimbabwe clamps down on dollar source, as inflation soars

Video credit: Reuters Studio
Published on March 16, 2020 - Duration: 01:19s

Zimbabwe clamps down on dollar source, as inflation soars

Zimbabwe's government suspended the transfer of local shares to foreign stock exchanges on Monday- one of the main sources of hard currency as inflation soars.

David Doyle reports.

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Zimbabwe clamps down on dollar source, as inflation soars

Zimbabwe has shut down one of the main sources of hard currency for citizens and businesses as soaring inflation - reported at over 540% on Monday (March 16) - wipes out the local currency.

Investors have been able to access dollars by buying shares in companies like Old Mutual, Pretoria Portland Cement and SeedCo which are listed on the Zimbabwean Stock Exchange, and then selling them on foreign bourses where the businesses are also listed.

But on Monday, Zimbabwe said it was suspending, for 12 months, the transfer of local shares in dual listed companies to foreign stock exchanges.

The move is part of measures, according to the national treasury, to "weed out some of the visible sources of currency instability." Zimbabwe reintroduced the Zimbabwe dollar last June - but with no foreign or gold reserves to back it up the value has plunged and inflation shot up.

On Monday, the country's data agency ZimStat resumed the publication of consumer price data, which was suspended last year.

It said year-on-year inflation was 540.16% in February.

The central bank forecasts that the annual inflation rate will fall to 50% by the end of the year, but analysts say price pressures remain due to the weak exchange rate and shortages of food following drought.

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