Zimbabwe’s Hard-Currency Auctions Offer Stranded Investors Hope
Zimbabwe’s Hard-Currency Auctions Offer Stranded Investors Hope
Zimbabwe’s adoption of new foreign-currency auctions offers overseas investors with funds stranded in equities a way to exit their holdings, said Justin Bgoni, chief executive officer of the local stock exchange.
The system allows investors to remit their funds, Bgoni said by text message on Friday. “We are hopeful that this will work.”
The central bank said on June 22 that 30% of all foreign currency traded at the weekly auctions would be reserved for disinvestment proceeds and dividend remittances. The country faces severe shortages of foreign currency and fuel, while consumer inflation surged to 786% in May. The Zimbabwe dollar is trading at 57.35 per U.S dollar after a currency peg of 25:1 in place since March was abandoned.
There is likely to be a rush among foreign investors to cash out of the Zimbabwe Stock Exchange in the coming weeks, said Kudzanai Samudzi, an equities trader at Harare-based MMC Capital. Trading volumes this week more than doubled to $635 million from $259 million the previous week, according to the latest data from the local bourse.
“It’s going to be a critical stage that we are getting into,” Samudzi said by phone. “Foreign investors will join the queue to see if they can get their money out.”
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