President Emmerson Mnangagwa has reiterated that his government has only banned transactions in foreign currencies but possession of the multi-currencies is still legal.
The Central Bank yesterday abolished the use of foreign currency in local transactions in a bid to curb black market demand. The local dollar is now the only legal tender, nearly a decade after it was destroyed by hyperinflation.
In the aftermath, there has been a lot of scepticism on the ownership of foreign currency with some fearing for their greenbacks which they possessed.
However, Mnangagwa quelled the fears saying the only ban was on the transaction rather than the possession.
“We have not banned the possession of any other currency except you cannot transact in any shop. If you want to buy your USD or Euro, you go to a Bureau de Change, that’s what is normal and that is what should be done,”
Zimbabwe abandoned its local currency in 2009 to tame hyperinflation and adopted a basket of several currencies, including the US dollar, British pound, euro, Chinese yuan, Botswana Pula and South African Rand.
The new measure has raised the ire of most struggling citizens as they fear that the move will likely worsen the situation.
Lawyer Alex Magaisa said there is a serious probability that the ban of foreign currencies will only make them significantly more valuable, pushing trade in foreign currencies further into the black market.
“As they become scarce and as trade in foreign currencies carries more legal risk, so will their price on the market. If the market decides that the Zimbabwe dollar is bad money, by Gresham’s Law, it will drive out the good money, making it scarcer, more valuable and, therefore, even more, expensive to access.
“This will only exacerbate the problems Zimbabwe is facing. It could be a short and painful resurrection for the Zimbabwe dollar,” he said.
MDC leader, Nelson Chamisa was infuriated by the move which he said was a guerilla tactic.
“Guerrilla economics and ambush currency measures are ill-advised, destructive and confidence-draining. Zim-dollarisation requires that macroeconomic fundamentals, public confidence, trust, fiscal discipline, political stability and legitimacy be in place for it to be meaningfully sustainable.
“Our economics suffers from too much State control and excessive politics otherwise known as economic dirigisme,” he said.