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Zimbabwe - Monthly Economic Review - July 2012


The beginning of the month saw the Euro becoming stronger against the US dollar by 0.66 percent (on a weekly scale). Furthermore, other “important” currencies such as the Australian dollar and Canadian dollar also sharply appreciated against the US dollar by 2.24 percent and 1.39 percent, respectively. The rally in the Euro/USD and AUD/USD may have been among the factors to curb the decline in gold and silver during the fi rst few days of the last week of June. During the week ending June 22, the market was left in disappointment after the Federal Reserve did not announce a more aggressive monetary policy stimulus as expected. The markets had been anticipating further monetary easing to maintain pressure on long-term interest rates and thereby keeping the opportunity cost of holding gold relatively low. Increased monetary easing would also enhance demand for gold as an alternative asset class to store value by placing downside pressure on the dollar. The last of week of June saw gold prices fall to four-week low in the range of US$1,585 per troy ounce earlier in the week with European fi nance offi cials working on critical measures to ease fi nancial pressure on Spain and Italy while the market felt that it was unlikely that additional stimulus will result from that week’s European summit in Brussels. On the other hand, the price of nickel started the month on an upward trend reaching the high of US$17 087 per tonne before it declined to close the month at a price of US$16 685 per tonne. The high prices for Nickel are likely to have infl uenced developments at Bindura Nickel Corporation (BNC), where the shareholders have agreed on the need to recapitalize and take different initiatives that might see the operations at the mine starting

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