The Sunday Mail
Enacy Mapakame
Business Reporter
The Zimbabwe Stock Exchange (ZSE) last week erased losses of the past three months as investors cheered the latest developments around the interbank foreign currency exchange market.
In the week to Thursday, the equities market recorded its first year to date gains, as bulls continued to dominate the local bourse as the local RTGS$ declined 33 percent to RTGS$4,70 against the greenback on the official interbank market.
Total market value jumped 8 percent to close at $20 billion.
The Industrials Index breached the 500 point mark after increasing by 8 percent to 517,77 points with a year to date gain of 6 percent.
The ZSE Top 10 Index put on 8,8 percent to 147 points, representing a 1,3 percent increase from January 02 opening level of 145 points.
At 154,86 points, the primary index, the ZSE All Share Index was 8,21 percent above prior week representing a 5 percent jump from year opening level.
The Mining Index of two active counters Bindura and RioZim, also closed in the positive after it inched up 1,1 percent.
Last week, the Reserve Bank of Zimbabwe announced a US$500 million Afreximbank loan that should ensure the interbank market will have sufficient forex stocks and create stability on the exchange rate, prices of goods and services as well as inflation.
The central bank also moved to remove the 1:1 peg for Oil Marketing Companies to access forex on the interbank market, effectively ending use of the peg.
Industrialists contend the latest developments mean with more liquidity on the interbank market, importers of raw materials will plan more stably, knowing they will access foreign currency at better official rates.
On the illegal parallel market, exchange rate was pegged at above 700 percent.
Industry has been battling foreign currency shortages for retooling and acquiring basic raw materials, which resulted in companies reducing production capacity.
For instance, beverages maker, Delta indicated it temporarily closed its sparkling beverages business in the previous financial year as foreign currency shortages persisted, which resulted in supply gaps.
The commencement of the tobacco selling season was expected to help improve foreign currency inflows and increase liquidity in the country.
But indications are that farmers are holding on to their product in protest over low prices. Official figures from the Tobacco Industry Marketing Board (TIMB) show that farmers have to date sold 101 million kilogrammes of the golden leaf to the tune of US$184 million, reflecting negative variances between volumes sold since the start of the marketing season in March and deliveries over the same period last year.
The volumes sold thus far this year are 20 percent lower than the 107 million kilogrammes of flue-cured tobacco worth US$361 million that had been sold by farmers during the same period prior year.
