ZSE loses US$1.9 bn due to devaluation of ZiG- economist

Economic analyst Admire Dube says the Zimbabwe Stock Exchange (ZSE) lost an equivalent of US$1.9 billion worth of market capitalisation following the devaluation of the local currency Zimbabwe Gold (ZiG).

“Following the ZiG losing 42.55% of its value today, this has seen the ZSE lose an equivalent of USD 1.9 Billion’s worth of total market capitalisation, in real terms, in an instant (from its ZWG 74.6 billion market cap)!

“But at least that is an “abstract loss”, for now, as long traders don’t close their positions.

“I expect within a week or so prices will “self-correct” to recover this loss in real terms, via nominal surges.

“Yes. I’m actually saying, ceteris paribas, and depending on individual counter fundamentals, I’m expecting a general doubling within 10 days, from 26 September 2024 share quotes.

“Those holding ZiG in cash and/or bank accounts, however, this is a real 42.55% loss in value, no matter how u cut that cake. In fact, those trying to hedge are part of the reason the ZSE bourse will experience a surge in the coming days,” he says.

Dube adds: “With the economy holding around ZWG 23 billion in broad money, by the last RBZ Survey, the exchange rate shift has wiped equivalent of USD600 million off of the Zim economy in an instant!”

Meanwhile, another economic analyst Baba Nyenyedzi says the devaluation of ZiG is purely an admission that ZiG was never anchored to gold or USD reserves.

“The biggest winner is Treasury because its deficit overnight is cut in half. It’s not punished for its profligacy. By end of year Treasury will claim deficit is under control.

“Just because the rate has moved from 14 to 25 to the USD doesn’t mean suddenly USD will magically appear on the market.

“The RBZ statement does not address this issue. Why is anyone with USD not willing to convert to ZiG except when forced by surrender requirements?”

Renowned banker, Tawanda Nyambirai says:

“The ZIG is supposed to be anchored on gold. Since its introduction, the gold price has gone up significantly. The ZIG has done the opposite.

“An official devaluation without explaining the correlation that is supposed to exist between the ZIG and the gold prices raises more questions than answers. It completely undermines trust in the Zig.

“It creates the impression that a currency was anchored on lies! How can the RBZ undermine the basis on which it launched its own currency like this?”

Zwnews