Stability, bond notes kill rand interest

THE recent stability of the South African rand against the United States dollar and the increase of bond notes in the economy have led to a decline in cross-border traders seeking the rand for their business.

BY TATIRA ZWINOIRA

This comes as traders were benefitting from the dollar gaining strength against the rand when the United States Federal Reserve increased its interest rates by 0,25 basis points to a range of between 0,5% and 0,75%.

Across Southern Africa, the rate hike led to regional currencies taking a knock, particularly the rand, since the region is a commodity-based market.

In the past week, the rand has been stabilising, ranging between R13,57 and R13,84 against the dollar, though it is still trading at $1:R14 locally.

On the issuance of bond notes, some banks are only giving out the surrogate currency due to low levels of the United States dollar in the market.

Two weeks ago, the Reserve Bank of Zimbabwe doubled the withdrawal limit of bond notes to $100 per day, while banks kept that of the US dollar at an average maximum of $50.

This led to more bond notes, which have proven difficult to exchange with cash dealers, being issued into the market.

The benefit of a strengthening dollar mean cross-border traders are able to get more of the rand when using dollars and, thus, purchase more goods.

Traders have also been cushioned by the stabilising of prices of goods in South Africa due to the country’s central bank’s monetary policies.

Analysts say when the rand is weaker, imports become cheaper, while exports become more expensive.

Zimbabwe Cross-Border Traders’ Association secretary-general, Augustine Tawanda told NewsDay that apart from the rate hike, the festive season usually sees an influx of the rand into the market from Zimbabweans living in the neighbouring country.

On average, cross-border traders need $300 a day to buy their wares from neighbouring countries, particularly South Africa.

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9 Comments

  1. Janana wa Bikaz

    Yes ,that as it may be,very soon the USD will eventually disappear from the market, marking the the beginning of a continuous production of the surrogate currency in bigger denominations in order to meet demand.Between now and mid year i bet my last bond coin,the market will be flooded with the bond notes and the USD will be more elusive than ever.Its actually the zanu pf government’s plan to have something to fall back in the obvious event that the USD dollar becomes scarce thereby heralding the backdoor arrival of our Zim Currency.All that talk of bonding 200 million with bond notes is just a smokescreen to hoodwink the ordinary person.Watch the space.

  2. Janana wa Bikaz

    Yes ,that as it may be,very soon the USD will eventually disappear from the market, marking the the beginning of a continuous production of the surrogate currency in bigger denominations in order to meet demand.Between now and mid year i bet my last bond coin,the market will be flooded with the bond notes and the USD will be more elusive than ever.Its actually the zanu pf government’s plan to have something to fall back on in the obvious event that the USD dollar becomes scarce thereby heralding the backdoor arrival of our Zim Currency.All that talk of bonding 200 million with bond notes is just a smokescreen to hoodwink the nation.Watch the space.

  3. Black market is on the horizon. Your concept of increased supply of bigger denominations is correct but it will dilute the buying value of the surrogates. So long!

  4. Bond riri kutenga zvimwe ndezvimwe. In December I failed to buy electricity at OK Mutare using rands. A week later CBZ Mutare refused to accept my rands to pay MSU fees. But the bond was like magic. Our prayer is that the bond retains its magic

    1. sho
      bt bond note magic is fake magic,

  5. True mwana wevhu Bond is just like a bomb it buys everything you want save for those vanongoshora zvisina plan at all.

  6. @janana…itsss not that simple. The flow of usd is mainly controlled by the rate of exports. The more we export the more the usd is available. So basically the reserve bank has been injecting bond notes into the economy on that basis..as in the level of exports determines the amount of bond notes that are put into the market. It is thus a good move for the moment…the only headache they have is keeping exports at those levels or to increase them inorder to keep the value of the bond itself.

  7. Thts awesome lets bond wth bond note

  8. We need our money not the USD and Rand. We cant use money for people who imposed sanctions on our country. Lets have pride and print our money without fear. Zimbabwe will never be a colony again.

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