Financial Services Group NMBZ Holdings Reports $348 Million Loss Due to Currency Conversion
In a recent announcement, NMBZ Holdings Limited, a leading financial services group, revealed that it suffered a significant loss of $348 million early this year when it converted its Zimbabwean dollar (ZW$) to the new currency, ZWG. The loss was attributed to the conversion process, which was necessary to comply with International Financial Reporting Standards (IFRS).
The ZWG, which was introduced on April 5, 2024, is a structured currency backed by mineral reserves and a pool of foreign currency, designed to serve as a shock absorber against hyperinflation. However, the conversion process from the ZWL to the new currency resulted in monetary losses for the group.
According to Pearson Gowero, NMBZ board chairperson, the group recognized these monetary losses as a result of the restatement of opening ZWL balances, which amounted to $348 million. This was necessary to comply with IAS 29 "Financial Reporting in Hyperinflationary Economies" and IAS 21 "The Effects of Changes in Foreign Exchange Rates".
Despite this setback, NMBZ reported that the new ZWG currency has shown signs of stability, with the economy gradually moving away from its hyperinflationary state. As of June 2024, the group expressed optimism about the future prospects of the new currency.
The loss is a significant blow to the financial services group, but it is a necessary step towards adapting to the changing economic landscape. The introduction of the ZWG is a major step towards stabilizing the Zimbabwean economy, and NMBZ’s willingness to take the loss is a testament to its commitment to its customers and the country’s economic growth.
