eBusiness Weekly
Business Writer
With the local currency already facing huge challenges in 2024, economic research companies are already forecasting a bleak year for the Zimbabwe Dollar.
In their 2024 outlook, Morgan and Co said; “2024 is already proving to be quite a challenge to decipher with global turmoil and local risks at play in Zimbabwe. We reiterate the fragile political environment that could extend to fiscal policy.”
Belief in the market is that, monetary policy direction could very much change considering that Dr John Mushayavanhu will be replacing the current governor, Dr John Mangudya, as his second term comes to an end in the first half of 2024.
“Expectations of a growing trade deficit in 2024 threatens to withdraw USD out of the economy at a time when the country is leaning on the greenback for stability,” Morgan and Co added.
With constrained USD inflows, local authorities could look to ZiG to reduce reliance on the USD given the Zimbabwe Dollar’s shortcomings as a stable currency.
“To this effect, we think that Zimbabwe Gold (ZiG) could be the highlight of monetary policy in 2024,” the outlook stated.
A probable scenario is that Zimbabwe Dollar will remain in the picture, but mainly as a placeholder until ZiG reaches mass adoption.
“As Morgan and Co Research, we opine that there are several pressures that could draw monetary authorities to inject more Zimbabwe Dollar into the economy, chief of them being an inadequate amount of Zimbabwe dollar in the economy to support the current FX retention and increasing fiscal demands.
“Further, the widening gap between the official and parallel market rate will likely trigger a devaluation of the Zimbabwe Dollar in the formal market. All this points to sustained inflationary pressures in 2024,” the research concluded.
