Harare economist, Brian Sedze has estimated that the USD to ZWL black market exchange rate is now one USD to 800 ZWL.
Writing on his Facebook profile , Sedze said :
The impute of the new bread price is that the implied exchange rate is US$ 1 is equal to about US$636.Its also its implied replacement value.
When Old Mutual shares were still fungible the rate was easily determined by the Old Mutual Implied Rate (OMIR) which was basically that the price of its share at JSE or LSE was the same as at ZSE the differential being the exchange rate.
In the world exchange rate is often determined by the McDonald’s index( big mac index) which uses purchasing power parity.A Mcdonald burger is the same or is standard.The difference in price in a country is the implied exchange rate on the US$
In Zimbabwe I have thought of the standard bread index.Our bread has always historically approximated US$1 or about US$0.90.
So whatever price you get for bread going foward is the exchange rate.If the price moves to ZW$800 as an example that’s the implied exchange rate.Anything lower one is getting a discounted rate and anything above a premium.
To determine exchange rate in the short term follow the bread price which can call Standard Bread Implied Rate( SBIR).
