Though Zimbabwe's president, Emmerson Mnangagwa, has repeatedly said he wants to reintroduce a new national currency, the end to the country's multicurrency system came quite suddenly. It was only in that Zimbabwe's local dollar was officially replaced by the US dollar to bring much needed stability to the economy. For most of the last decade the dollar was indeed a stabilizing hand, but recently the country was running out of the greenbacks as more was being spent on imports. Inflation was creeping up. Not surprisingly, many on the ground were caught off guard and are skeptical, not least because of the country's financial history.
Christopher Mugaga, chief executive officer of the Zimbabwe National Chamber of Commerce, thinks these sudden changes are bad for businesses already suffering from uncertainty and will not solve the currency problem or put a stop to a parallel economy of different black market prices. Business people might not necessarily want to sell in RTGS openly," which would only lead to a growth in the black market. Inflation cannot be simply ignored or taken away, he added.
It was first implemented in near the end of Robert Mugabe's year reign when the government started to pay with the electronic currency because of a lack of US dollars. At the time, the central bank claimed that RTGSs were equal to the US dollar, but bank withdrawals were only given in bond notes, a type of paper currency, and not in actual dollars.
The exchange rate on the street was not one-to-one, as many Zimbabweans looking for bucks on the black market found out.
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Since then it has fallen further. Blocking the use of foreign currency is a last-ditch effort to get a handle on the black market and stabilize the economy. Yet this step just adds confusion to an already jumbled economy. Some food, fuel and other imported goods are in short supply at the moment. Jane Kawanza, who runs information and technology shops in Harare that are reliant on imports, expressed disappointment at the government's decision.
And that's not good for business. That is a huge disadvantage to the consumers because goods are going to be overpriced," she added. For the moment, customers can pay with the official bond notes and coins or via mobile payment systems. These payments fall within the official government system and exchange rates.
Zimbabwe shuts out foreign currency to tighten economy
Nonetheless, many on the street are still buying and selling in US dollars or South African rands — and getting better deals — although it is no longer allowed. So far Harare has not gone after this parallel economy. In any case, the government must prove that its new currency is trustworthy. This can only be done by getting inflation under control and restoring price stability. But going by the country's track record, it will be an uphill battle to convince the people of Zimbabwe to let go of the mighty US dollar and again reach for something more homemade.
Skyrocketing fuel prices are adding to the misery of Zimbabweans, already reeling from indefinite rolling power cuts imposed last week. Most residents are wary of the move saying it could worsen the cash crisis.
The move has prompted fears of a return to hyperinflation. This year has seen cryptocurrency bitcoin shatter all growth expectations, continuing to defy dark predictions.
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In Zimbabwe, its growth has been particularly striking, all the more so amid recent political turbulence. Zimbabwe's President Emmerson Mnangagwa has denied reports of a rift between himself and his deputy, a former army general who led the coup that toppled longtime ruler Robert Mugabe. Zimbabwe's government has been ordered to restore access to online programs such as Facebook, WhatsApp and Twitter. The government had blocked internet access as part of a widespread clampdown on dissent.
In the early s their farms were forcefully seized. Over 18 years later, Zimbabwe's white farmers are still seeking compensation. Now they are suing South Africa for helping Robert Mugabe suppress their case. There is a need for better food security and an economic upturn, but also for a more transparent land reform. President Mauricio Macri's government has imposed foreign-exchange controls on Argentine exporters.
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Why fears of hyperinflation won't die
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