HARARE, Zimbabwe (AFP) - A week after crisis-ridden Zimbabwe launched a new foreign exchange trading system, the local currency has shed a third of its value to reflect realistic levels prevailing in the parallel market.

The Zimbabwe dollar bucked from its official exchange rate of 26,000 to the greenback to an average of 74,000 in the week after the country decided to launch inter-bank trading.

Rates, however, varied widely from one bank to another with some offering US$58,000 while others went above US$85,000 compared to the average parallel market rate of around US$100,000.

Cash-strapped Zimbabwe on October 21 introduced the new tradable foreign currency system (TFCBS) to replace a 21-month-old auction system, where the buying and selling rates were largely controlled by the central bank.

Under the new regime, exporters can sell foreign exchange at a market-determined rate.

Non-governmental organisations and embassies can also sell their currency in the inter-bank market while importers can likewise access foreign exchange at the market rate.
Exporters can now trade 70 per cent of their foreign currency earnings at the market-determined rate while the remaining 30 per cent has to be surrendered to the central bank at the official rate, which is adjusted from time to time.

The move to end six years of central bank control over foreign exchange got the thumbs up from analysts.
"This was a very bold decision and a step forward," said economist Witness Chinyama.

A University of Zimbabwe economic commentator, Charles Halimana, said central bank governor Gideon Gono tried to match the parallel market rates without officially announcing a devaluation.

"It is really an effort on the part of Gono to rein in the parallel market," said Halimana.

Last year, the central bank tried a foreign exchange auction system, also with the aim of clamping down on the underground market, but it proved to be a non-starter.

Zimbabwe has long been experiencing a shortage of foreign currency as external debts have accumulated, while the government has failed to import adequate vital commodities such as fuel and medicines.

But in recent weeks the southern African country made a surprise debt repayment to the International Monetary Fund of US$135 million of a US$295 million loan. It plans to clear the remaining debt by next year.

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