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| author/source:Zim Online (SA) |
| published:Thu 27-Oct-2005 |
| posted on this site:Thu 27-Oct-2005 |
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| Article Type : News |
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| "People do not want to trade at rates that might make some people uncomfortable" |
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Harare - The Zimbabwe dollar yesterday clawed back from heavy losses on Tuesday to trade at around $60 000 to the greenback in a move market traders said could be a pointer to an “invisible hand” trying to influence the direction of the battered local currency. The dollar had on Tuesday plummeted 193 percent from $26 000 to $76 300 to the US dollar, which was within distance of the $90 000 the local dollar changes for against the US unit on the thriving black market, where many Zimbabweans obtain their foreign exchange. However the Zimbabwe dollar had shed some of the losses yesterday, trading in a range of between $45 000 and $63 000, giving a weighted average of $60 200 to the greenback. Traders with local banks said there was general fear in the market on whether they could set higher rates and had resorted to wait for direction from the Reserve Bank of Zimbabwe. Under the new interbank system, the RBZ buys all excess hard cash daily from banks at the weighted market average rate of $60 200 to the American dollar, unilaterally set by the central bank and which traders say they do not know how it is calculated. Holders of free funds, diplomats, individuals and Zimbabweans abroad sell their hard cash at the market average rate.
“It is still too early to say why the currency appreciated but it could be that people do not want to trade at rates that might make some people uncomfortable in the short-term,” a trader with a Harare commercial bank told Zim Online. “If you look at it there is no fundamental basis for the currency to appreciate, but then it is still too early to pass judgement on whether someone is trying to influence the market.” Analysts say the new interbank market can only succeed if market forces are left to determine the rates. Exporters are required to sell 70 percent of their proceeds at the interbank market and the rest at the central bank auctions where the Zimbabwe dollar is still trading at $26 000 to the greenback. There are very few banks that are trading, with most opting to take a wait and see approach but traders say the market could be much active by the end of next week when all outstanding issues are cleared. Some dealers charged that large and established banks, that have the bulk of customers were also trying to influence the market by quoting the Zimbabwe dollar at below $50 000.
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