Zimbabwe’s government has ordered banks to halt lending with immediate effect in an effort to halt speculation against the Zimbabwean dollar, which is part of a slew of steps aimed at halting the currency’s fast depreciation on the black market.
After being struck by hyperinflation in 2009, the southern African country revived a native currency in 2019.
On the underground market, however, the Zimbabwean dollar, which is officially priced at 165.94 versus the US dollar, has continued to fall, trading between 330 and 400 to the greenback.
From around 200 Zimbabwe dollars at the start of the year, the black market exchange rate has increased.
Zimbabwea’s President, Emmerson Mnangagwa announced steps on Saturday aimed at halting the currency’s devaluation, which he claimed is hampering Zimbabwe’s economic stability.
In a statement, Mnangagwa said, “Bank lending to both the government and the business sector is thus halted with immediate effect, until further notice.”
He accused unidentified speculators of borrowing Zimbabwe dollars at interest rates below inflation and utilising the funds to trade currency.
Other measures include a greater tax on forex bank transfers, higher fees on forex cash withdrawals over $1,000, and the payment of taxes in local currency that were previously levied in forex.
Inflation has been driven up by the depreciation of the Zimbabwe dollar’s black-market exchange rate, which is utilised in most financial transactions in the country.
In April, year-over-year inflation accelerated to 96.4 percent, up from 60.6 percent in January.