Zimbabwe News

New currency triggers panic in Zimbabwe

Long-suffering Zimbabweans should brace for even tougher economic times ahead, following last week’s surprise announcement by Finance minister Mthuli Ncube that the country would have yet another currency within the year – a move experts say will drive up the prices of basic goods and also cause shortages.

The warning comes as most big supermarkets and other retail shops around the country have hiked the prices of basic consumer goods – sharply raising the cost of living for ordinary citizens.

Ncube has revealed that the country will have its own “new, fully-fledged currency” within the next 12 months to ease the cash shortages on the market.

In an interview with United States-based Bloomberg Television yesterday, Ncube also said Zimbabwe will soon introduce a central bank reference rate as part of measures to save the economy from further collapse.

Ncube is in Washington DC, for the International Monetary Fund (IMF) and World Bank 2019 Spring Meetings, where he hopes to open new lines of credit for the country that is desperate for industrial re-capitalisation.
Ncube said he also hopes to close the gap between the exchange rate for United States dollars in the official and parallel markets using RTGS dollars, which the government introduced in February.

Asked to be specific on timelines of the introduction of the new currency, Ncube was coy.

“With currency reforms, you can never be precise, but I say 12 months. I am preparing minds, I am preparing your mind, so it is coming,” Ncube said.

The announcement comes at a time the official and parallel market rate of the US$ and RTGS$ continue to widen since the introduction of the virtual currency in February, when government dumped the 1:1 parity that had been in place since 2016 when the bond notes were introduced.

The introduction of the RTGS$ was accompanied by the introduction of a market-based foreign exchange market, where market forces using an inter-bank rate would determine the US$ value against the local virtual currency.

But after holding firm at 1:2.5 for a few days, the RTGS$ has plunged and pushed up the prices of goods, raising fears that the country could be sliding back to the 2008 hyper-inflationary era when Zimbabwe experienced a record 179,6 billion percent inflation rate.

Source: Bulawayo news

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