Cablegate: Zimdollar Tumbles Further

This record is a partial extract of the original cable. The full text of the original cable is not available.

061157Z Aug 03

UNCLAS HARARE 001578

SIPDIS

STATE FOR AF/S and AF/EX
NSC FOR SENIOR AFRICA DIRECTOR JFRAZER
USDOC FOR 2037 DIEMOND
PASS USTR FLORIZELLE LISER
TREASURY FOR ED BARBER AND C WILKINSON
STATE PASS USAID FOR MARJORIE COPSON

E. O. 12958: N/A
TAGS: ECON EINV PGOV ZI
SUBJECT: Zimdollar Tumbles Further

1. Summary: The Zimdollar has fallen another 25 percent
from Z$3350 to 4200:US$1. End Summary.

2. In early May, the Zimdollar still traded at
Z$1450:US$1, so the three month devaluation stands at
around two-thirds. While a number of factors are
weakening the Zimdollar, oil parastatal NOCZIM has been
aggressively selling 91-day bonds and converting the
proceeds into U.S. dollars for fuel purchases. (Even so,
NOCZIM is only supplying subsidized fuel to the GOZ's own
vehicles and some commuter vans.) The largest Zimbabwean
note is now worth 12 US cents. A Z$ 1 coin, still widely
circulated, exchanges for US$.0002. If you carry 42 of
these bulky coins in your pocket, you have one US cent.

3. Comment: Through accelerating inflation and a
weakening Zimdollar, the GOZ is confronted with its
failed economic policies. The Zimdollar has nearly
fallen below the Zambian Kwacha, currently trading at
4560:US$1, a psychological barrier for a country that
once looked down its nose at poorer neighbors.

Whitehead

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