Monday January 27, 2020
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Zimbabwe Ends Its Interim Currency in New Currency Reform

This move is really beginning to restore full monetary policy

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Zimbabwe, Currency, Reform
FILE - People walk past the Reserve Bank of Zimbabwe building in Harare, Zimbabwe, Feb. 25, 2019. VOA

Zimbabwe made its interim currency the country’s sole legal tender on Monday, ending a decade of dollarization and taking a another step towards relaunching the Zimbabwean dollar.

The central bank also hiked its overnight lending rate to 50% from 15% as a part of a set of measures to protect the RTGS dollar introduced in February.

“The march towards full currency reform is part of our transitional stabilization program,” Finance Minister Mthuli Ncube said in a video posted on Twitter. “This move is really beginning to restore full monetary
policy.”

Zimbabwean President Emmerson Mnangagwa, who replaced longtime leader Robert Mugabe after an army coup in November 2017, is trying to repair an economy ruined by hyperinflation and a long succession of failed economic interventions.

Zimbabwe, Currency, Reform
Zimbabwe made its interim currency the country’s sole legal tender on Monday. Pixabay

But a hoped-for economic turnaround is yet to materialize, and many Zimbabweans are distrustful of Mnangagwa’s promises.

Mnangagwa’s government last month agreed a staff-monitored program with the International Monetary Fund (IMF) whereby the fund will help Zimbabwe implement coherent economic policies.

Analysts are skeptical that the latest currency reforms will be a quick fix for the deep problems that have constrained economic growth in the southern African country.

“Zimbabwe will have to show results before people are convinced,” said Jee-A Van Der Linde, an economist at South Africa-based NKC African Economics.

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Van Der Linde said banning the use of currencies such as the U.S. dollar and South African rand could create panic since Zimbabwe did not have large foreign-currency reserves to back the RTGS dollar.

There was nothing standing in the way of the Zimbabwean central bank printing money as it had done in the past, he added.

The central bank said in a statement on Monday that it had put in place letters of credit worth $330 million to secure imports for important goods such as fuel.

It would also try to boost liquidity on the interbank forex market by removing a cap on margins for banks and making sure that more than 50% of the foreign currency that Zimbabwean companies have to surrender ends up on the interbank market.

Zimbabwe, Currency, Reform
The central bank also hiked its overnight lending rate to 50% from 15% as a part of a set of measures. Pixabay

Zimbabwe abandoned its own dollar in 2009 after years of hyperinflation had destroyed trust in the local unit.

Mnangagwa said this month that Zimbabwe must reintroduce its own currency by the end of the year.

The IMF has said Zimbabwe should quickly allow the RTGS dollar to float freely, allow exporters to sell dollars at the interbank rate rather than surrender them to the central bank, and raise interest rates to curb inflation.

The RTGS dollar has been hitting new lows on the black market in recent days.

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It was trading between 11 and 12 against the U.S. dollar on the unofficial market on Monday versus a level of around 6 on the official interbank market.

Many Zimbabweans complain that goods and services are still priced in other currencies.

While more than 80% of Zimbabweans earn RTGS dollars, goods ranging from bricks to groceries have their prices pegged in U.S. dollars.

Inflation raced to 97.85% in May, eroding salaries and savings and causing Zimbabweans to fear a return to the hyperinflation era a decade ago. (VOA)

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Rob Booker’s Review of 2020

Twenty Twenty is a year that has opened up on the verge of considerable political turmoil

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2020
Twenty Twenty is a year that has opened up on the verge of considerable political turmoil creating a volatile market for investments, in particular, the Forex Trade. It is this turmoil and its impact on the value of three major currencies in the market that is the main focus of the Review for 2020, given by Rob Booker, recently.  Pixabay

 Updates and projections for the upcoming year feature all kinds of data based on the political and economic scenarios. Reviewing some of the projections and concerns raised in the latest video by Rob Booker, it is evident that in the forex trading market, several anomalies could tip the balance of the currency rate either way.    

Twenty Twenty is a year that has opened up on the verge of considerable political turmoil creating a volatile market for investments, in particular, the Forex Trade. It is this turmoil and its impact on the value of three major currencies in the market that is the main focus of the Review for 2020, given by Rob Booker, recently.  

According to Booker, the three major currencies that could behave unpredictably are the British Pound, the Canadian Dollar and the US Dollar. These three are the main currency pairs that attract investment. However, the profitability of investments will depend on the response of the market to the political instability and the turmoil that may or may not result as a result of three political and economic scenarios. 

The main events that will have an impact on the currency pairs USD/CAD and GBP/USD are the Non-Formal Payroll Report (NFP) that is coming out in the context of the instability that may arise in the US as a result of President Trump’s impeachment, the potential for a war between USA and Iran,  the Bank of Canada interest rates and Brexit. 

2020
With the start of the new year 2020, interest in business, currencies and how they will trade in the current year is the hot topic. Pixabay

As appropriately pointed out by Rob, the successful impeachment of the 45th President of the US by the House of Representatives has opened a trial in Senate for abuse of power and for blocking Congress, against Donald Trump. How the US economy reacts to this will become evident in the Non-Form Payroll Report (NFP), which will determine how the US Dollar trades in the Forex markets. 

A second politically explosive situation is the threatened war between Iran and the US. Motivated by the airstrikes on the Iraqi airport that killed a significant Irani general, the tensions that emerged saw the Iranian head of state promising vengeance against the US. If this situation escalates, then it is evident, it would influence the value of the US dollar.   

The second event, Rob, points out as key indicators of future investments is the interest rate set by the Bank of Canada. As these interest rates will determine how much money will flow freely in the market in the current scenario.  

In this context, Rob Booker identified the trade between the currency pair USD/CAD  is poised at a critical stage. He uses the shoulder-head analysis technique to determine the bullish-to-bearish trend reversal for the USD/CAD currency pair. The currency pair are exhibiting a traditional technical pattern, where the currency exchange is set to move potentially either showing a bearish trend down to the 1.26 level or on the other hand, the pair could climb up to the 1.34 mark, which is a climb of 500 pips and which could potentially act as a great point of resistance. Here, Booker advises a wait and watch strategy as soon as the rate climbs up to the 1.32 mark and then making a decision about securing your investment.            

Finally, the third unpredictable situation that is set to create a volatile marketplace is Britain’s exit from the UK with no deal. If there is a smooth transition and confidence in the British pound remains unaffected,  then there will be no effect on the currency pair USD/GBP. However, if there is some trouble or an unprecedented reaction, to Brexit, then it will affect the value of the British Pound.   

The projection given by Rob Booker  – how you can learn more about on the Rob Booker Trading Podcast – using the head and shoulder pattern to identify the future trend for the currency pair USD/GBP for the specified period is that if there is a strong job report and there is political instability regarding the no-deal Brexit, then the value will come down to the 1.22 mark. The counterbalance figure for this currency pair in the event of a weak job report from NFP and there is no impact resulting from the British political scenario, then the pair could go up to 1.35, and it could go on increasing for some time. However, Booker advises that investors should wait and see how it pans out in the coming weeks as there is likely to be less trade based on these currency pairs. 

Analysing this information in comparison with projections made by two forex trading experts, we found that this analysis of the market for the two currency pairs USD/CAD and USD/GBP was generally held to be true and their projections of how the currencies would behave are quite similar. G10 Forex Index for 2020 predicts a bullish climb for USD/GBP to a 1.40 mark and a reversal mark at 1.29. For the USD/CAD pair targeting 1.30 as it continues its breakdown, and the risk is set at the 1.32 mark.   

 For a review of how the two currency pairs behaved in the first few weeks of January, we studied the data from a forex website. The 100forexbrokers.com highlighted the recent rise of the British Pound against the US Dollar by 10 points totalling it near 1.3100. However, they projected that “it may remain bearish because of the higher low printed in the recent upside move”. The price may also face a horizontal resistance around the 1.3144 and 1.3165 marks, and then the December 13, 2019 mark of 1.3514. Secondly, the support levels may help sustain its value with strong support around the 1.2919 and 1.2551 marks.  

Dollar, Currency, Money, Us-Dollar, Franklin, Seem
According to Booker, the three major currencies that could behave unpredictably in 2020 are the British Pound, the Canadian Dollar and the US Dollar. Pixabay

Presenting the data by 100forexbrokers.com in the analysis of the currency pair USD/CAD, the Forex market showed an increase in the price to more than 1.300. However, the website projects that this currency pair will also follow a bearish technical bias.  USD/CAD current price is set at 1.3022 and the resistance levels marked near the 1.3052. The major support levels have been identified at the 1.2950 and 1.2727 point. 

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There is a lot of material on the internet claiming to give authentic reviews of the trading trends and markets usually accompanied by the disclaimer that history is not a predictor of future trends and most advisors analysis is based on these back trends. In any event, the data speaks quite clearly for the projections and the patterns of behavior observed. Both currencies have seen little trade, as investors have generally chosen to wait and see what happens at the political end.