There is a worsening economic and political crisis hitting Zimbabwe. Inflation and prices are on the rise, there is a shortage of foreign exchange and supplies of fuel, food and pharmaceuticals are drying up.
Signs in Zimbabwe are pointing to a possible rerun of the massive crisis that engulfed the country about a decade ago. Among them is a sudden surge of the country's stock exchange's industrial index in October, which now stands at the relatively high market valuation of $22 billion (€19.3 billion), a sudden gain of more than 50 percent in a matter of days.
According to the market's spokesperson Tapiwa Bepe, the surge is a consequence of the country's profound crisis. "The political and economic environment is volatile. The heightened activity on the stock market was therefore investors scrambling to take positions in real assets by disposing of cash and bank balances," Bepe told DW. Foreign investors and national investors believe that stocks and shares offer more security.
But brokers like Itai Chirume say it has become extremely difficult to take out money locked in electronic bank balances from the stock exchange. "What we have seen is that foreigners have been taking their money out through the medium of fungible shares," investing them in foreign companies, he said. That way the money is leaving the country through legal means.
The 76-year-old leader said that Zimbabwe would continue using the multi-currency system which the country adopted in 2009 after abandoning its worthless currency. But the hard currencies – mainly the US dollar and South African rand -, making up the system together with government issued so called bond notes, have been hard to find lately on the formal market. And many in Zimbabwe believe that the time has come to scrap bond notes altogether. Economist John Robertson explains why it is a mistake not to: "The existence of the bond notes caused the US dollar to go out of circulation." An end to the bond notes would bring back in the US dollar, which would be good for the economy, Robertson told DW. Bond notes, a currency Zimbabwe started printing about two years ago to ease cash shortages and help fight hyperinflation, have been losing value lately. They were supposed to trade at par with the US dollar, but are now almost four against the greenback.
Signs in Zimbabwe are pointing to a possible rerun of the massive crisis that engulfed the country about a decade ago. Among them is a sudden surge of the country's stock exchange's industrial index in October, which now stands at the relatively high market valuation of $22 billion (€19.3 billion), a sudden gain of more than 50 percent in a matter of days.
According to the market's spokesperson Tapiwa Bepe, the surge is a consequence of the country's profound crisis. "The political and economic environment is volatile. The heightened activity on the stock market was therefore investors scrambling to take positions in real assets by disposing of cash and bank balances," Bepe told DW. Foreign investors and national investors believe that stocks and shares offer more security.
But brokers like Itai Chirume say it has become extremely difficult to take out money locked in electronic bank balances from the stock exchange. "What we have seen is that foreigners have been taking their money out through the medium of fungible shares," investing them in foreign companies, he said. That way the money is leaving the country through legal means.
The 76-year-old leader said that Zimbabwe would continue using the multi-currency system which the country adopted in 2009 after abandoning its worthless currency. But the hard currencies – mainly the US dollar and South African rand -, making up the system together with government issued so called bond notes, have been hard to find lately on the formal market. And many in Zimbabwe believe that the time has come to scrap bond notes altogether. Economist John Robertson explains why it is a mistake not to: "The existence of the bond notes caused the US dollar to go out of circulation." An end to the bond notes would bring back in the US dollar, which would be good for the economy, Robertson told DW. Bond notes, a currency Zimbabwe started printing about two years ago to ease cash shortages and help fight hyperinflation, have been losing value lately. They were supposed to trade at par with the US dollar, but are now almost four against the greenback.
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