US embassy cable - 04HARARE1324

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Parallel Market Over Z$10,000:US$

Identifier: 04HARARE1324
Wikileaks: View 04HARARE1324 at Wikileaks.org
Origin: Embassy Harare
Created: 2004-08-04 06:06:00
Classification: UNCLASSIFIED
Tags: ECON EAID EAGR EINV PGOV ZI Economic Situation
Redacted: This cable was not redacted by Wikileaks.
This record is a partial extract of the original cable. The full text of the original cable is not available.


 
UNCLAS HARARE 001324 
 
SIPDIS 
 
STATE FOR AF/S, AF/EX 
USDOC FOR AMANDA HILLIGAS 
TREASURY FOR OREN WYCHE-SHAW 
PASS USTR FLORIZELLE LISER 
STATE PASS USAID FOR MARJORIE COPSON 
 
E. O. 12958: N/A 
TAGS: ECON, EAID, EAGR, EINV, PGOV, ZI, Economic Situation 
SUBJECT: Parallel Market Over Z$10,000:US$ 
 
Ref: Harare 1319 
 
A brief update on yesterday's report (ref):  Bids topped 
$53 million for the $9.5 million on offer at Monday 
afternoon's Reserve Bank (RBZ) auction.  The immense 
unsatisfied demand is migrating quickly to the parallel 
market.  Yesterday, the RBZ shut down an exchange house 
in a Harare neighborhood where the rate ranged from 
ZS10,000-11,000:US$.  A high-level RBZ official admitted 
to us that speculative demand for US dollars at those 
rates was strong, with the expectation that Z$15,000:US$ 
is just around the corner.  The official (auction) rate 
nudged up to Z$5400:US$.  (Comment:  This is a 
significant crisis for the GOZ and RBZ.  With an iron 
fist, they are attempting to fight market dynamics and 
enforce an arbitrary exchange rate.  The overvalued rate 
will no doubt be center stage at the Confederation of 
Zimbabwe Industries' annual convention later this week.) 
 
Sullivan 

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