Zimbabwe on Verge of collapse due to Printing Worthless Currency

Published on July 26, 2011 by Anna Jay · No Comments

Foreign Exchange Overnight/Morning Ranges:

Rates EUR/USD 1.4356 – 1.4521

Rates GBP/USD 1.6265 – 1.6413

Rates GBP/EUR 1.1258 – 1.1333

Gideon Gono the Reserve Bank of Zimbabwe Governor has expressed regret for printing the local currency in larger quantities between 2003 and 2008, leading to near virtual collapse of the national economy.

Gono said in a meeting with the Zimbabwe Independent newspaper that no country should print money indiscriminately as this leads to devaluation, flourishing black markets and widespread speculation and that the ZANU PF government forced the Reserve Bank to print money for purposes such as purchasing agricultural inputs. Gono gave no hint that he would consider stepping down for pursuing such policies.

The dollar has fallen to another record low against the Swiss franc overnight as the political wrangling between the Republican and Democrats continues with no apparent sign of compromise, and the August 2^nd deadline for default getting nearer by the day. President Obama has pleaded that politics be put aside, saying that failure to agree could do serious damage to the economy.

The markets will continue to remain nervous ahead of the deadline and while there is no agreement the dollar is likely to remain under pressure. Also not helping the dollar is the general feeling in the markets that although Europe is not out of the woods yet there is now some consensus about how to solve the problems in Europe moving forward with many now seeing fiscal union as the next step.

EUR/USD currently 1.4498. Support 1.4300, resistance 1.4600.

GBP/USD currently 1.6388 Support 1.6250, resistance 1.6500.

GBP/EUR currently 1.1308. Support 1.1100, resistance 1.1500.

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