Bitcoin prices almost double in troubled Zimbabwe

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INTERNATIONAL - Volatility has hit Zimbabwean financial markets leading to a spike in bitcoin prices to $13000 (Global average is about $7000 per bitcoin) and a surge in the US dollar/bond note parallel exchange rate as political upheavals escalate. President Robert Mugabe yesterday fired his deputy, Emmerson Mnangagwa, for "disloyalty, deceitfulness and disrespect". Mugabe "exercised his powers" to relieve Vice-President Emmerson Mnangagwa of his position, Information Minister Simon Khaya Moyo said at a press briefing in Harare. Mnangagwa, long touted as a likely successor to Mugabe, stands accused of plotting to topple Mugabe, in charge of Zimbabwe since independence from Britain in 1980. The Zimbabwean first lady said there was nothing wrong in her gunning for a higher position of power and many believe Mnangagwa, said to enjoy the support of the military, stands in her way. The political uncertainty, which has worsened in the past few months, has come on the backdrop of a spike in parallel market currency rates. Also read: OPINION: Investing in cryptocurrencies like Bitcoin

Zimbabwean markets are trading in anticipated uncertainty and traders were moving out of local monetary assets, analysts said Monday. The US$ is now fetching a 62percent premium compared to bond notes, while the rand is around 1:10 compared to bond notes although the government insists that the bond note has equal value to the greenback. On the parallel markets, $100 is being traded for $162 in local bond notes, while R1000 is being traded for around $100 in bond notes.

Political tensions have been bubbling over in Zimbabwe and investors, trapped by foreign currency shortages, have been seeking ways to exit the country.

The measures they have adopted include trading-in their Zimbabwean bank account values for hard currency on parallel markets as well as bitcoin trade.

The crypto-currency’s price has surged to above $13000 in Zimbabwe and traders say trade in bitcoin is booming.

Yeukayi Kusangaya, an expert at Harare based Golix, the only bitcoin exchange platform in Zimbabwe, told Business Report yesterday that the platform accepts mobile money and local bank transfers for trade in bitcoin.

Zimbabwe last month blamed social media for inflaming currency rates in the country and this was preceded by the establishment of a cyber security, threat detection and mitigation ministry. An American programmes officer for a local advocacy and satirical online platform, Magamba TV, has since been arrested for a tweet critical of Mugabe.

Units of Standard Bank and Standard Chartered in Zimbabwe have said that Visa debit cards would no longer be usable for international payments without prior arrangements and pre-funding with hard currency. This comes as Zimbabwean companies continue to face hurdles in effecting foreign payments for imports and raw materials owing to foreign currency difficulties.

“You will be required to make prior limit arrangements with the bank,” Stanbic said in a message to depositors last week. Econet Wireless has also stopped foreign payments on its MasterCard linked EcoCash mobile money debit card.

Companies in Zimbabwe such as Delta Corporation, Tiger Brands’ National Foods and British American Tobacco Zimbabwe have failed to remit dividends to international shareholders. Analysts expect the situation to worsen as foreign currency shortages coincide with the political uncertainty inside Mugabe’s party ahead of elections next year.

- BUSINESS REPORT