Zimbabwe started on Friday to trade its new currency, the RTGS dollar, two days after the central bank announced measures to try and resolve a chronic monetary crisis.
On Wednesday, the bank unveiled a foreign exchange trading system thateffectively devalued its quasi-currency, the bond note, which was officiallypegged at parity with the US dollar, reports BSS.
“We have basically formalised what is happening. We have basically ensured that no one goes to buy currency from the parallel market,” Reserve Bank of Zimbabwe governor John Mangudya said then.
At the start of the century, Zimbabwe regularly posted fiscal deficits itfinanced by printing money, which led to hyperinflation that wiped outpersonal savings, left shops empty and made it all but impossible to buy atank of petrol or daily groceries.
Inflation peaked at 500 billion percent before the national currency wasabandoned in 2009 in favor of the US dollar and other foreign currencies.
Abandoning its own currency ended inflation and brought some stability tothe country but the supply of US dollar notes gradually dried up.
An attempt to introduce another currency in 2010, fell flat and the RTGSdollar represents the government’s latest bid to have its own money.
“The trade has begun this morning,” Mangudya told a meeting of businessleaders in Harare on Friday.
The new currency replaces electronic bank savings called digital dollarsand the bond notes and was named after the real-time gross settlement (RTGS) system that banks use to transfer money between each other.
Mangudya said the currency was launched at an initial rate of 2.5 RTGSdollars per US dollar, “as per agreement with forex dealers in the banks”.
On Wednesday, the street value was around four RTGS dollars per US dollar,and on Friday, a commercial bank in Harare, the pan-African Ecobank, wasbuying the US dollar at 2.439 RTGS dollars and selling the US currency at2.5625 RTGS dollars.
The central bank wants to encourage domestic transactions in RTGS dollarsand eliminate a multi-tier pricing system which has seen goods and servicespriced in both US dollars and bond notes.
Zimbabwe’s economy has been on a new downturn since 2012, with highinflation and cash shortages that forced banks to cap withdrawals, forcingdepositors to spend hours queueing to withdraw cash.
President Emmerson Mnangagwa, who succeeded long-time ruler Robert Mugabe following a brief military takeover in 2017, has vowed to revive thecountry’s moribund economy.
In October the government slapped a two percent tax on all electronictransactions, triggering price hikes and shortages of fuel and basiccommodities.
In January, official annual inflation shot to 57 percent from 42.09percent in December 2018.
The same month Mnangagwa announced that the price of fuel would more than double, sparking nationwide protests that left at least 17 people dead after soldiers were deployed to crush them.