- Published on 22 December 2015
- Written by Online Correspondent
THE Reserve Bank of Zimbabwe allayed fears over the return of the local currency after panic gripped the banking public yesterday following a fake message circulating on social media platforms which said Government has resolved to re-introduce the local currency.
According to the message, the reintroduction will counter “negative” effects caused by the appreciation of the US dollar against the currencies of the country’s major trading partners.
Reserve Bank of Zimbabwe governor Dr John Mangudya however, said such claims “are unfounded”.
Dr Mangudya said Business that the message was false and not called for as it will cause panic among Zimbabweans who are already traumatised from the hyperinflationary environment.
While high demand for cash is synonymous with holidays such as the current festive season, banking sources said yesterday the “unusually high demand of cash triggered the message”.
At the height of economic challenges in 2008, Zimbabwe adopted the multi-currency regime anchored in US dollar. This was meant to stabilise the economy and establish a credible nominal anchor. The replacement of the Zimdollar brought the hyperinflation and the currency devaluation to a halt, laying foundations for economic recovery.
Average annual inflation during 2009-2013 was 3,3 percent, while the real gross domestic product grew on average more than 8 percent a year.
The message claimed the Cabinet and Parliament okayed the re-introduction of the local currency, which would be temporarily used as bond notes and bond coins. It said the decision was taken after Finance and Economic Development Minister Patrick Chinamasa proposed the return of the local unit to enhance competitiveness of local firms.
The message claimed that local companies had been thrown out of business as a result of continued appreciation of the dollar against currencies of trading partners, particularly the SA rand.
Dr Mangudya said Minister Chinamasa’s statement had been quoted out of context.
“In fact, pensioners received their payments in US dollars yesterday while grant-aided institutions will be paid out on Wednesday (tomorrow).”
The message further claimed the internal devaluation proposed by Dr Mangudya has failed to achieve the desired results, hence the need to re-introduce the local currency. Banking officials said the banking public should not panic.
“This is economic sabotage,” said an official with one of the leading banking institutions.
“While we are making efforts to restore public confidence, we have such things happening.”
Another official said the public should not take the message seriously considering that despite claims that banks will start receiving “notes and coins” yesterday, “there is no such thing”.
Minister Chinamasa and Dr Mangudya have on several forums said the Zimbabwean dollar will only return after all the fundamentals to support the local currency are re-introduced.
Minister Chinamasa said the re-introduction of the Zimbabwean dollar under the current environment would be counter-productive.
The minister said the major reasons for introducing the multi-currency regime were inflation pressures, unsustainable current account position, fiscal imbalance and depressed real sector activities. While some progress has been achieved in some areas, it is not enough to support the return of Zim dollar.