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Top Zimbabwean retailers are raising concerns about potential store closures due to the government’s insistence on using an official exchange rate that they believe is overvalued and detrimental to their competitiveness. Zimbabwe’s new gold-backed currency, ZiG, has experienced a significant devaluation of almost 80% on the black market, trading between 20 and 26 ZiG to $1. Official guidelines mandate formal retailers to set prices based on the official exchange rate of 14.8 ZiG to $1 or face fines. However, retailers such as OK Zimbabwe, Spar, and TM Supermarkets argue that this inflated rate is causing their products to be more expensive than those in informal shops, resulting in a loss of customers. The Retailers Association of Zimbabwe (RAZ) has warned that failure to intervene with policy measures to protect the formal retail sector could lead to company closures. Retailers are struggling as their suppliers are charging black market rates, forcing them to raise prices. The ZiG, Zimbabwe’s sixth attempt at a stable currency in 15 years, is facing public confidence issues as its devaluation continues.
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Emma Collins, graduated in Financial Economics from the University of Chicago in the USA in 2016. She has since worked at an asset management firm in New York, where she specializes in investment strategies and portfolio management. Emma has a keen interest in financial analysis and has published several articles in renowned financial journals. Her work focuses on providing actionable insights to investors, and she is known for her forward-thinking approach to managing financial portfolios.
