Zimbabwe reintroduces new currency in attempt to rebuild shattered economy

Cheryl Sanders
June 25, 2019

It is an about-turn on a decision by the Zimbabwean authorities in February 2009 to introduce a basket of foreign currencies that have been accepted as legal tender over the past decade.

"The march towards full currency reform is part of our transitional stabilisation programme", Finance Minister Mthuli Ncube said in a video posted on Twitter.

But a hoped-for economic turnaround is yet to materialise, and many Zimbabweans are distrustful of Mnangagwa's promises.

Zimbabwean President Emmerson Mnangagwa, who replaced longtime leader Robert Mugabe after an army coup in November 2017, is trying to fix an economy ruined by hyperinflation and a long succession of failed economic interventions.

Mnangagwa's government last month agreed a staff-monitored programme with the International Monetary Fund (IMF) whereby the fund will help Zimbabwe implement coherent economic policies.

As a result, yesterday we passed a Statutory Instrument to abolish the use of multiple currencies, and make the Zimbabwe dollar the sole legal tender with immediate effect.

By A Correspondent- Zimbabwean Banks have hiked interest rates "Nicodemously".

He said apart from outlawing use of foreign currency, the move would "change very little".

In a statement released on Tuesday, Mnangagwa said it had always been clear that for the country's economy to take off, "we need our own currency".

National Business Council of Zimbabwe president Mr Langton Mabhanga said Zimbabwe needed its own currency for local transactions and limit the usage of foreign currency for importing.

Zimbabwe adopted the U.S. dollar as its official currency in 2009, when most Zimbabweans had already ditched the hyperinflation-wrecked Zimbabwe Dollar.

The RTGS dollar has been hitting new lows on the black market in recent days.

The continued depreciation of the local currency against the U.S. dollar has seen most businesses preferring to quote prices in forex in an economy where the majority of the citizens are getting incomes in RTGS dollars. Early Monday morning, the bond notes were trading around 1:10 against the US Dollar while the official interbank market rate is around 1:6.2.

Government on Monday removed the multi-currency regime and restricted domestic transactions to local currency in an effort to enhance affordability of goods and services by the majority.

Inflation has climbed to a decade high 97.86%, eroding salaries and savings and causing Zimbabweans to fear a return to the hyperinflation of 2008 when the rate reached 500 billion percent.

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