HomeGeneral News

"Zimbabwe Dollar Technically Dead"

1 year agoSat, 25 Mar 2023 09:53:35 GMT
Share on FacebookShare on TwitterShare on LinkedIn
"Zimbabwe Dollar Technically Dead"

The Zimbabwe Dollar is now technically dead and this will be followed by a USD cash crunch, economists have warned.

Economics Professor Gift Mugano has said the Zimbabwean economy has already attained the peak of dollarisation as US dollar transactions are now around 80 percent.

Speaking during an interview with Business Weekly, Mugano observed that the economy could be heading towards another “painful currency circle” that could have serious implications on investments and confidence. He said:

If you look at all indicators available, that is, the percentage of transactions in US dollars and the percentage of loans in US dollars, I would argue that we have already attained the peak of dollarisation.

You agree with me that at least 80 percent of loans and transactions are now in US dollars.

Buy Samsung, itel, Redmi smartphones in Zimbabwe

WhatsApp: +263715068543

Some sectors such as pharmaceuticals have reached a 100 percent level of transactions in US dollars.

Going forward, I doubt if we can make further significant gains as far as the level of dollarisation is concerned.

Rather, I see the economy driving back to the Zimbabwe dollar. In simple terms what I am saying is that we are in the 2013-2018 replay.

Mugano warned that the banking system and Government, combined, were facilitating a process for the creation of “fake” US dollars or US dollars in RTGS.

He said this is being done through the process of issuance of loan creation and treasury bills which are later discounted. Said Mugano:

When loans are issued the bank is anticipating income interest rate and associated bank charges yet the borrower is not generating foreign currency, that is, through exports or international consultancy.

Likewise, when the Ministry of Finance and Economic Development issues treasury bills in US dollars which are later on discounted they are technically printing money that is not backed by hard notes in USDs.

This process results in the creation of USD in RTGS which I call fake USDs. To date, our banking system has an estimated figure of US$1,5 billion of USDs in RTGS platform, that is, fake USDs, while the real hard notes are around US$1 billion.

This is the premise of my argument that the Zimbabwe dollar is on its way back.

An economist with a State-owned financial institution told Business Weekly that the Zimbabwe dollar “is technically dead”, adding:

I think the Zimbabwe dollar will be lost now, but it will be short-lived.

This will be followed by a US dollar cash crunch down the road, and we begin all over again.

In 2009, the government abandoned printing Zimbabwean dollars entirely due to hyperinflation and adopted the use of foreign currency in all local transactions.

In early 2019, the Reserve Bank of Zimbabwe (RBZ) announced plans to bring back the Zimbabwe dollar as legal tender.

Since its re-introduction, initially as bond notes, and then as RTGS dollars, the Zimbabwe dollar’s value has plunged dramatically.

On 21 March 2023, the official exchange rate was US$1: ZWL$915.

More: Pindula News

Tags

22 Comments

Leave a Comment


Generate a Whatsapp Message

Buy Phones on Credit.

More Deals
Feedback