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Zimbabwe banks ordered to ring-fence foreign currency accounts

 
Zimbabwe bond note
  • Central Banking Newsdesk
  • 03 Oct 2018
The Reserve Bank of Zimbabwe has ordered banks to ring-fence nostro foreign currency accounts in what appears to be a step towards de-dollarising the country.

“This is essential in order to preserve value for money for the banking public and investors during the transition to a more market-based foreign currency allocation system,” the central bank said in its most recent monetary policy statement.

Such a system would be implemented once “the economic fundamentals are appropriate to do so”, it

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https://m.news24.com/Africa/Zimbabwe/zim-dollar-will-be-reintroduced-at-an-appropriate-time-says-vp-chiwenga-20180630.......

Zim dollar expected to make a comeback, says VP Chiwenga

time_icon_grey.png 15:30 30/06/2018
 
 
 

Vice President Constantino Chiwenga says the Zimbabwe dollar will be reintroduced at an "appropriate time", after the government has fixed the country's ailing economy.

According to the state-owned Heraldnewspaper, Chiwenga told Zanu-PF supporters at a rally in Shurugwi this week that the government needed to sort out the country's economy by "reopening industries" first.

The Zimbabwean dollar collapsed between 2008 and 2009 due to hyperinflation, thus, forcing the country to adopt a basket of foreign currencies that included the South African rand, the United States dollar, the British pound and the Euro. 

Chiwenga's remarks came a few days after President Emmerson Mnangagwa made similar remarks.

 

Mnangagwa reportedly "hinted on plans to reintroduce" the dreaded Zimbabwean dollar in order to address the current issue of cash shortages in the southern African country.

According to NewsDay Mnangagwa said that the country was in need of its own currency.

Diamond and gold reserves

This was not the first time that Mnangagwa made such comments.

In July 2017, Mnangagwa, then vice president, was quoted by the Heraldnewspaper as saying that government was "building diamond and gold reserves to back the local currency upon its re-introduction in future".

Mnangagwa, however, refused at the time to disclose when the local currency would be re-introduced, but said it would only come back when mineral reserves reached desired levels.

"We are building reserves of gold and diamonds which if they reach a certain level I will not tell you here, it will then allow us to introduce our own currency that will be backed by those minerals. I am not at liberty to disclose to you the level that we want those minerals to reach before they can back our own currency," Mnangagwa was quoted as saying.

For two years now Zimbabwe's worsening cash shortages have caused misery for locals trying to withdraw their money from banks.

Cash has remained on high demand, especially for things like bus fares

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https://m.news24.com/Africa/Zimbabwe/zim-leader-hints-on-plan-to-bring-back-dreaded-zim-dollar-report-20180627......

Zim leader hints on plan to bring back dreaded Zim dollar – report

time_icon_grey.png 06:02 27/06/2018
 
 
 

President Emmerson Mnangagwa has reportedly "hinted on plans to reintroduce" the dreaded Zimbabwean dollar in order to address the current issue of cash shortages in the southern African country.

According to NewsDay, prior to an alleged assassination attempt on Saturday, the president told his supporters that the country was in need of its own currency.

The Zimbabwean dollar collapsed between 2008 and 2009 due to hyperinflation, thus, forcing the country to adopt a basket of foreign currencies that included the South African rand, the United States dollar, the British pound and the Euro. 

This was not the first time that Mnangagwa hinted on the return of the Zimbabwe dollar. 

 
 

In July 2017, Mnangagwa, then vice president, was quoted by the state-owned Herald  newspaper as saying that government was "building diamond and gold reserves to back the local currency upon its re-introduction in future

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Zimbabwe Promises New Currency as Dollar Shortage Bites

January 12, 2019 10:30 PM
A motorcyclist with two jerry cans attached to his motorbike counts his bond notes at a fuel station, Jan. 11, 2019, in Harare.
A motorcyclist with two jerry cans attached to his motorbike counts his bond notes at a fuel station, Jan. 11, 2019, in Harare.
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HARARE, ZIMBABWE — 

Zimbabwe will introduce a new currency in the next 12 months, the finance minister said, as a shortage of U.S. dollars has plunged the financial system into disarray and forced businesses to close.

In the past two months, the southern African nation has suffered acute shortages of imported goods, including fuel whose price was increased by 150 percent Saturday.

Zimbabwe abandoned its own currency in 2009 after it was wrecked by hyperinflation and adopted the greenback and other currencies, such as sterling and the South African rand.

But there is not enough hard currency in the country to back up the $10 billion of electronic funds trapped in local bank accounts, prompting demands from businesses and civil servants for cash that can be deposited and used to make payments.

Minister of Finance Mthuli Ncube presents his budget statement in the Parliament of Zimbabwe, Nov. 22, 2018, in Harare.
Minister of Finance Mthuli Ncube presents his budget statement in the Parliament of Zimbabwe, Nov. 22, 2018, in Harare.

Two weeks of reserves

Finance Minister Mthuli Ncube told a townhall meeting Friday a new local currency would be introduced in less than 12 months.

“On the issue of raising enough foreign currency to introduce the new currency, we are on our way already, give us months, not years,” he said.

Zimbabwe’s foreign reserves now provide less than two weeks cover for imports, central bank data show. The government has previously said it would only consider launching a new currency if it had at least six months of reserves.

Bad memories of Zimbabwean dollar

Locals are haunted by memories of the Zimbabwean dollar, which became worthless as inflation spiraled to reach 500 billion percent in 2008, the highest rate in the world for a country not at war, wiping out pensions and savings.

A surrogate bond note currency introduced in 2016 to stem dollar shortages has also collapsed in value.

President Emmerson Mnangagwa is under pressure to revive the economy but dollar shortages are undermining efforts to win back foreign investors sidelined under his predecessor Robert Mugabe.

Mnangagwa told reporters Saturday that the price of petrol had increased to $3.31 per liter from $1.32 since midnight but there would be no increase for foreign embassies and tourists paying in cash U.S. dollars.

Locals can pay via local debit cards, mobile phone payments and a surrogate bond note currency.

Public transport drivers complain about having to pay for fuel in U.S. dollars at a fuel station, Jan. 11, 2019, in Harare. Motorists are spending nights waiting in long queues for petrol and diesel as the country is experiencing crippling fuel shortages.
Public transport drivers complain about having to pay for fuel in U.S. dollars at a fuel station, Jan. 11, 2019, in Harare. Motorists are spending nights waiting in long queues for petrol and diesel as the country is experiencing crippling fuel shortages.

With less than $400 million in actual cash in Zimbabwe, according to central bank figures, fuel shortages have worsened and companies are struggling to import raw materials and equipment, forcing them to buy greenback notes on the black market at a premium of up to 370 percent.

The Confederation of Zimbabwe Industries has warned some of its members could stop operating at the end of the month because of the dollar crunch.

Cooking oil and soap maker Olivine Industries said Saturday it had suspended production and put workers on indefinite leave because it owed foreign suppliers $11 million.

A local associate of global brewing giant Anheuser-Busch Inbev said this week it would invest more than $120 million of dividends and fees trapped in Zimbabwe into the central bank’s savings bonds.

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