Zimbabwe to add its tenth “currency” in circulation

Zimbabwe’s central bank will probably in August introduce its own “bond notes”, valued at par with the U.S. dollar, into the country’s multi-currency system that has allowed nine world currencies to circulate legally in the market.

Governor of the Reserved Bank of Zimbabwe, John Mangudya was quoted that the launch date was around August or September, not in June as previously projected.

The Zimbabwean authorities in May announced strict capital control measures, including cash withdraw caps, and export-incentive schemes, in which exporters would be rewarded with bond notes, to tame a liquidity crunch of the U.S. dollar starting in March.

The issuance of the bond notes was supported by a 200-million-U.S.-dollar loan facility provided by African Export-Import Bank and monitored by International Monetary Fund (IMF), the paper said, allaying mounting public fear surrounding the bond notes.

The fear of a return of the Zimbabwe dollar, which was rendered useless amid hyper-inflation after wiping out Zimbabweans’ savings and pensions, prompted bank runs in the past two weeks as people rushed to banks to withdraw their U.S. dollars.

“Let me emphasize again, there is no return of the Zimbabwean dollar. The multi-currency regime is here to stay,” the report quoted Finance Minister Patrick Chinamasa as saying. “The unnecessary large withdrawals are unwarranted. The market should remain calm and conduct business in the normal manner.”

He said the reason for introducing bond notes is to sustain the multi-currency system, which had equal amount of the U.S. dollar and South African Rand at its launch but gradually transformed into a mono-currency market overwhelmingly dominated by the U.S. dollar. The euro, British pond, Chinese yuan, Japaese yen, among other legal tender recognized by the Zimbabwean authorities can hardly be found in the market.

Central Bank Deputy Governor Kupukile Mlambo assured the public that the authorities will not channel the U.S. dollar out of the market through back doors and the issuance of the bond notes will be limited in amount not exceeding 200 million U.S. dollars in total.

“Anyone who wants to travel to South Africa, the United Kingdom or any other country can still go to their bank and get their dollars,” he said. “There won’t be many of these bond notes which will circulate within Zimbabwe only.”

 

 

Xinhua / Zainab Sa’id