The gap between official and unofficial rates has narrowed significantly in recent weeks. At the start of August unofficial rates hovered around the $1 000 ZWL per 1 USD mark but now if you try to sell your US dollars on the black market you would be lucky to get $750 ZWL per 1 USD. On the other hand, the official willing buyer willing seller rate rose from $449.6571 per 1 USD to the current $591.9534 as of 12 September. Despite all this most businesses are still very reluctant to accept Zimbabwean dollars. It seems like they feel this is just a temporary lull before the storm picks off again.
During our most recent survey over the weekend we visited a lot of shops both in the formal and informal sector posing as clients. Of particular interest to us was determining just how many services one could access using ZWL and what rate the businesses would use for this. We made the following observations in the process:
- As always formal retailers were happy to take ZWL. Most formal retailers however were still using rates of around $850 ZWL per 1 USD. Far above the black market street rates of $650 ZWL per 1 USD that black market street dealers are offering.
- Those who sold foreign currency outside these shops were paying between $650-$700 ZWL per 1 USD for a swipe depending on your negotiating skills and how much you wanted.
- Despite the fact that the official rate is now very close to the unofficial rate most people were still paying using ZWL with very few people paying using USD.
- Fuel service stations including those affiliated with the government were of course not accepting ZWL. This is easy to understand. Unlike most businesses that are allowed to use their own rate as long as it is within the 10% range, ZWL fuel prices are set by ZERA. These often use a lower rate that is not attractive enough for fuel stations to sell their fuel in ZWL. Fortunately for them the government allows them to sell exclusively in USD.
- A lot of pharmacies still set their prices in USD although some will accept ZWL if you ask nicely it is not their preferred currency one of the ladies manning the counter of a famous pharmacy chain told us point blank. Rates vary between $750 ZWL per dollar to an eye watering $1 000 ZWL per dollar if you do decide to go the ZWL route when making payment. Some pharmacies are happy to sell only locally made medicines using ZWL but will refuse to allow you to buy chronic condition drugs such as those required by diabetics and those suffering from high blood pressure using ZWL.
- Downtown tuckshops famous for their very low prices will turn you away if you attempt to pay using swipe or ZIPIT. A number, but not most, are willing to accept a cash rate of $800 ZWL per 1 USD when you pay using ZWL cash (aka bond notes). All the tuckshops we visited that were accepting ZWL cash had some sort of limit to the amount of ZWL cash they were willing to take per customer fearing that the rate could change unexpectedly.
- Vendors at places like Mbare Musika still do not accept RTGS but will take your cash at a rate of $800 ZWL per 1 USD. Most sales by farmers and retailers there are still exclusively in USD.
All in all we noticed that the level of trust in the Zimbabwean dollar had not improved much even though the rate seems to have stabilised. The cause for this is rather obvious. Most retailers, based on past experience, feel the lull will not last. They are wary of getting burned as has happened countless times before. The most savvy traders we met are not unware of why the rate seems to have stabilised. They know government contractors are not getting paid and the market is dry. That could change any moment as soon as the ZWL taps are inevitably turned back on. Then all hell will break lose. They have lost too much in the past and feel like rather than genuinely reforming the ZWL currency the government is just trying to game the system by having their cake and eating it too.