Politics and Society
Cartoon: Zimbabwe reintroduces the Zim Dollar
The Reserve Bank of Zimbabwe announced the re-introduction of the Zimbabwean Dollar replacing the multiple currency system in use since 2009 when hyper-inflation forced the country to abandon the local currency. The reintroduction has been largely met with cynicism. What do you think about the return of the Zim Dollar?
The Reserve Bank of Zimbabwe announced the re-introduction of the Zimbabwean Dollar (Statutory Instrument 142 of 2019) replacing the multiple currency system in use since 2009 when hyper-inflation forced the country to abandon the local currency.
The new Zimbabwe Dollar does not yet exist in paper form, and the new currency will now be the only accepted legal tender within the county except in specific exceptions, which were indicated in a statutory instrument issued by the finance ministry.
The reintroduction of a local currency has been largely met with cynicism, considering the hyperinflation which led to its abandonment in 2009. There is a serious lack of trust in country’s banking system, which stems from the public’s distrust of the government’s monetary policy interventions. In 2016, the reserve bank introduced Bond Notes, which traded at par with the U.S. Dollar. Despite the Bond Notes being notionally pegged to the US dollar, the pseudo currency slowly lost value and began to collapse. In February this year the central bank ditched the 1:1 exchange rate between its surrogate Bond Note and the U.S. Dollar and introduced the inter-bank market for the trading of foreign currency. The country has continued to grapple with various economic challenges. Annual inflation rate is over 95 percent, and salaries and wages have been been eroded. Companies are closing and investors are putting cash in stocks to avert losses.
The reintroduction has been largely met with cynicism from the public. Former Finance Minister and opposition MDC legislator Tendai Biti described the introduction of the Zimbabwean Dollar by government as a “disaster”. Speaking in parliament following the announcement Biti was quoted saying: “A currency is a relation between imports and exports and as long as you have a deficit in your current account, and we do not have current account sir we do not have reserves that are necessary to support our local currency”.
What do you think about the return of the Zim Dollar?