Foreign reserves expected to remain weak

Zimbabwe’s foreign reserves are expected to remain low while the national currency devalues further over the next six months, the Commercial Bank of Zimbabwe was quoted as saying on Wednesday.

“The currency situation remains critical, with huge imports backlogs mounting,” the bank said in its weekly treasury commentary. “The currency, although continuing to be managed, is expected to devalue further in line with inflation differentials over the next six months,” the bank said. “The situation might improve if the market observes the set parameters and discourages the parallel market.”

The bank added that tobacco sales, a key earner of foreign currency, had increased. But inflows of US dollars were not being felt because Zimbabwe owes so much money for imports - especially fuel and electricity.

Meanwhile, the Zimbabwe government announced on Wednesday it had found the cash for another 10 million litres of fuel, news reports said. A spokesman for President Robert Mugabe’s office was quoted on Wednesday as saying that the government had paid US $3 million in arrears to a Kuwaiti oil supplier to allow the company to resume supplies halted at the Mozambican seaport of Beira.