Analysis by Region - Emerging Markets - Zimbabwe
The recent El Niño-induced drought has heightened the demand for food imports, worsening the balance of payments and depleting foreign exchange reserves. Disaster relief efforts have further strained fiscal spending, adding to pressure on the currency. As a result, Zimbabwean authorities devalued the ZiG by nearly 43% in September, narrowing the gap between the official and black-market exchange rates. While this adjustment is a step in the right direction, it is unlikely to be a one-off measure, as underlying structural issues will continue to weigh heavily on the currency.
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