Zimbabwe's interim currency fell to a new low on the black market on Thursday and local firms were demanding payment in US dollars as a hedge against inflation, which is running at its highest in a decade. The RTGS dollar has plunged 60% against the US dollar since its introduction in February, and public sector workers' demands for a second pay rise this year could undermine a government drive to convince lenders of its fiscal discipline.
President Emmerson Mnangagwa won a disputed election last year on a promise to revive a Zimbabwe economy shattered by decades of mismanagement by his ousted predecessor Robert Mugabe.
But a year later daily life is harder. Ordinary Zimbabweans are enduring a severe shortage of US dollars, fuel, medicines, bread and daily power cuts that last 10 hours. The RTGS dollar, introduced by the government on February 22 as the first step towards a new currency by year-end, traded at 10.5 to the US dollar on Thursday, 14.3% lower than a week ago.
On the official interbank rate, the RTGS currency was pegged at 6.2 compared to 5.9 a week ago. Zimbabwe formally adopted the US dollar as its official currency in January 2009, when most Zimbabweans had already ditched the hyperinflation-wrecked Zimbabwe Dollar. A decade later, analysts see the same situation repeating itself.
More than 80% of Zimbabweans earn RTGS dollars but from bricks to rentals, car parts and many grocers, prices are now pegged in US dollars. That has seen inflation race to 97.86% in May, its highest level in a decade, eroding salaries and savings and causing Zimbabweans to fear a return to the hyperinflation of 2008 when the rate reached 500 billion percent, leaving many destitute.
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