The still very young reincarnation of the Zimbabwean dollar which was introduced back in 2019 has had a rough ride since its reintroduction. This year has been especially tougher on the young currency with the shedding value against the preferred USD at an unprecedented rate. When the year began shops were using a rate of around $210 ZWL per 1 USD when setting their prices but now they are using a rate of $1000 ZWLper 1 USD and we can prove it based on the latest results of our usual price surveys.
In our latest survey, we noticed the following prices in all the three big supermarkets i.e. Pick N’ Pay, Food World and OK as well as in other shops including the famous Mahommed Mussa wholesaler:
- A pack of 4 (Petal) tissues was selling for $1 300 ZWL compared to about US$1.30 in the tuckshops that exclusively sell in USD.
- Red Seal Roller Meal was selling for an average of $4 800 ZWL per 10kg sack compared to US$4.80 to $5.00 in the tuckshops.
- A crate of 30 eggs is being sold for around $3 500 ZWL and $4 200 ZWL in supermarkets and US$2.80 and US$3.80
- Commercial beef is being sold at around $4 500 ZWL per kg and US$4.50 per kg
- Boom washing powder was selling for $3 800 ZWL for a 2kg pack which is selling for US$3.70 in tuckshops
- Boom thick bleach is selling for $1 800 ZWL in Food World and Trade Centre and about US$1.80 at Tsiga grounds
- A pack of “Jiggies” is selling for about $ 1 200 ZWL in supermarkets and US$1.20 at Mbare Musika retail stalls
- A 500g package of dried beans is selling for $605 ZWL and US$0.50 respectively.
- It’s the same with chicken cuts which are selling for around $3 800ZWL and US$3.80 in other butcheries
We could give you more and more evidence like this but the picture is pretty clear. Shops are now using a rate of $1 000 ZWL as to 1 USD at the very least. It seems some shops are using a rate that might be above this. It is always hard to tell what exact rate shops are using because they tend to have more overhead expenses compared to tuckshops and Facebook Market sellers. However, in this case, it is pretty clear that the rate has at the very least reached the dreaded 1 000 ZWL mark.
Why you are not getting this rate on the streets?
Whenever we publish our rate page we get a lot of people calling us all sorts of names. They feel like we are manipulating the rate even though we clearly state that we do not publish black market rates. We publish rates that shops use to set their prices because we are called Zimpricecheck for a reason. More often than not there is a difference between what you can get when you sell your USD on the streets and what shops us. Generally, there are several types of unofficial rates:
- The buying rate which is the rate that the black market on the streets is willing to pay you. This is often lower than the rates shops are using.
- The asking rate-this is the rate you pay when you buy foreign currency on the black market. This is often higher than the buying rate.
- The difference between the two rates is known as the spread. This is how the black market dealers make some of their money.
- Shops tend to use a rate that is closer than the asking rate or even higher because they have to buy foreign currency from these dealers too.
- Sometimes shops even charge a higher rate because they are using what is known as a forward rate. They is a time lag between when they make a ZWL sale and when they get to change the money from ZWL to USD on the black market. To shield themselves from possible rate hikes they use a rate that is much higher than even the asking rate. They figure that once the time they need to make conversion arrives the rate would be closer to what they forecasted. Today that rate is roughly around $1 000 ZWL while the actual asking rate is around $950 ZWL.
A self-fulling prophecy
Such rate movements and predictions tend to be self-fulfilling prophecies. Everyone is trying to shield themselves from future rate increases so they start using that rate of $1 000 ZWL and just like that it becomes the new asking rate. Shops have to come up with a new rate to protect themselves so they end up settling for say $1 200 ZWL and everyone follows suit. That is speculative behaviour that the government is always castigating and blaming for causing rate spikes. The truth is the government is partly right. Another cause is money printing which often comes in the form of government contracts in Zimbabwe.