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Falling rand, kwacha double edged sword for Zim

Harare - The falling rand and the Zambia kwacha have become more of a double edged sword for Zimbabwe's manufacturing companies, a survey has shown.

An industry survey report released on Wednesday by the Confederation of Zimbabwe Industries (CZI) says "the crash of the South African rand and the Zambian kwacha has caused more complex challenges to the Zimbabwean economy.

"There have been calls to devalue internally and CZI has gone some strides in exploring the possibility of such an initiative given that Zimbabwe is using a stronger US$ currency," said CZI in the report.

South Africa and Zambia are the biggest trading partners for Zimbabwe, which exports 31.9% of its manufactured products to Zambia and 17.6% to South Africa.

The falling kwacha, down by approximately 57% in 2015, and the rand, down by approximately 19%, has meant Zimbabwean products are now less competitive in both local and foreign shelves.

Like a doubled edged sword the current trend means South African and Zambian products can now be imported into Zimbabwe much cheaper while exported Zimbabwean products are now expensive.

The situation is likely to remain dire amid news that the rand retreated on Thursday after the Federal Reserve signalled it may lift interest rates at its next policy meeting.

The US Fed kept interest rates unchanged on Wednesday but hinted strongly at a December hike, lifting the dollar to a two-and-a-half-month high against a basket of currencies.

       
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