Informal traders and public transport operators in Zimbabwe are refusing to accept the ZWL$50 note due to the country’s currency depreciation against the US dollar. The ZWL$2, ZWL$5, ZWL$10, and ZWL$20 notes have already been phased out of circulation as a result of the rapid depreciation.
Since the August 23-24, 2023 elections, the local currency has lost more than 18% of its value, currently standing at US$1 to ZWL$5,466.74. Consequently, traders and transport operators are reluctant to deal with smaller denomination notes, as it would require handling large amounts of cash for even minor transactions.
A recent survey conducted by NewsDay Business in Chitungwiza, a town near Harare, confirmed that transporters were now refusing to accept the ZWL$50 note. Commuters expressed frustration, with one individual named Marrian Chigwada stating that their ZWL$50 notes were being rejected due to concerns about their difficulty in disposing of them.
Similar experiences were reported by other commuters. Effie Ncube, the president of the National Consumers Rights Association, commented on the situation, stating that the rejection of lower denomination notes reflected a lack of confidence in the local currency and the government’s economic policies.
Ncube further explained that this lack of confidence would likely result in further depreciation of the Zimbabwean dollar against major currencies, leading to increased prices of goods denominated in local currency. As a consequence, inflationary pressures on Zimbabwe dollar prices would emerge.
The preference for the US dollar over the Zimbabwean dollar demonstrates the market’s desire for greater stability, as the greenback allows people to plan for the future with more confidence. In contrast, the Zimbabwean dollar’s value is unpredictable, contributing to the market’s inclination towards dollarization.