Zimbabwe introduces new currency

The Reserve Bank of Zimbabwe (RBZ) introduced four new currency denominations in a bid to heal the ailing economy and set a maximum of 8 percent interest rate per annum on bank loans as part of measures to ignite economy growth. These four introduced currencies include the Australian dollar (AU$), Chinese yuan (CYN), Indian rupee (INR) and Japanese yen JPY).

 Presenting the monetary policy, the acting RBZ governor Dr Charity Dhliwayo said the recently recapitalised central bank was geared to resuscitate the economy in a manner that creates jobs.“Trade and investment ties between Zimbabwe, China, India, Japan and Australia have grown appreciably. It is against this back ground of growth in trade and investment ties that in the 2014 National Budget, the Minister of Finance and Economic Development underscored the importance of including other currencies in the basket of already circulating currencies,” Dhliwayo said.

 She added that individuals and corporate bodies could now open foreign currency accounts in nine denominations which include the new four introduced and the five being used at the moment, which are the Botswana pula, Euro, British pound sterling, South African rand and the United States dollar. For the moment, people were advised to open bank accounts in these currencies but the hard cash is not yet in circulation. People were not impressed with the new development as they were heard in the city centres complaining that they were hoping for the resurrection of the Zimbabwean dollar. “Personally, as a Zimbabwean doing business l am not comfortable with using these currencies,” said one of the students at NUST. “What l want to see is how the banks themselves will respond to the use of these currencies.”Another complaint was that the people were saying even though the RBZ introduced other currencies the US dollar will still be in their favour. “I definitely think there is going to be confusion being caused by so many currencies- for a cashier to be handling so many currencies at the same time,” said Denford Matashu, general manager of Food World, a nationwide supermarket chain.

 However, there are some people who think that the introduction of the new currency will be an added advantage to them. A second hand car businessman says the multi-currency system is an advantage for him. “We have the option of using many currencies given different clients we deal with,” said a Zimbabwean businessman based in Japan. For economists like Christopher Mugaga, the introduction of the new currencies was nothing but just heading for doom. He said the system is not the solution to Zimbabwe’s economic woes, with its chronic unemployment and shrinking manufacturing sector. Analysts even added that the addition of several currencies to those already in use, though welcome, will not do much to alleviate the economic crisis the country is facing. The former finance minister, Tendai Biti said the addition of currencies alone would not revive the fragile economy. “It doesn’t make a difference even if you add a hundred more currencies,” Biti said. “The problem is the crisis of production and the collapse of aggregate demand.” The problems the country faces are not monetary but fiscal. Biti warned the country’s spiral into deflation would significantly reduce economic activity regardless of the additional currencies injected into the economy.

WE WAIT TO SEE HOW THIS WILL SHAPE UP!!!!!!