... but exporters will keep money outside the country, writes Martin Rushmere
A 25% devaluation of the Zimbabwe dollar will lead to a temporary improvement in trade but thereafter the slump will continue, say economic observers.
The value of the currency is now 50 to the U.S. dollar after 18 months of a fixed rate.
Economists say that while devaluation is a step in the right direction, much more needs to be done. In particular they point to a new regulation that forbids trading on the parallel market.
It is virtually impossible to legislate against a parallel market, says economist Tony Hawkins. Most people feel that the official rate should be between 55 and 60 to the U.S. dollar.
Companies and individuals will find a way round the rules and the result will be that exporters will keep much of their money outside the country.
Crucial to the success of the devaluation policy is the degree of flexibility of the exchange rate. Ideally the rate would be allowed to slip by about 2% a month, says economist John Robertson. If there is an attempt to keep it fixed then we are back to the same situation as before and all the benefits will have been lost.
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