The Zimbabwe Stock Exchange (ZSE) has experienced a significant decline of 99.95% in its All Share Index since the introduction of the gold-backed Zimbabwe Gold (ZiG) currency on April 5th. This sharp drop follows the devaluation of the Zimbabwean dollar, which lost 80% of its value in 2023.
The conversion of share prices from the old currency to the new ZiG has led to a substantial decrease in trading volume and transaction values. Prior to the conversion, investors had flocked to stocks as a way to safeguard their assets against the collapsing local currency and soaring inflation, which reached a seven-month high of 55.3% in March.
The ZSE has been one of the few investment options available in Zimbabwe for investors looking to protect themselves from exchange rate volatility and inflation. However, the recent surge in stock prices, while initially seen as a positive development, has raised concerns among some analysts. They believe that it could signal the potential for another currency crisis in the future.
