International Financial Management 2nd Edition by Geert Bekaert ,Robert Hodrick

Exercise 11

Toward the end of 1999, the central bank (Reserve Bank) in Zimbabwe stabilized the Zimbabwe dollar, the Zim for short, at Z$38/USD and privately instructed the banks to maintain that rate. In response, at the end of 1999, an illegal market developed wherein the Zim traded at Z$44/USD. Are you surprised at rumors that claim corporations in Zimbabwe were "hoarding" USD200 million Explain.