International and regional currencies such as the rand, US Dollar, Botswana Pula and British Pound will no longer be acceptable in Zimbabwe as legal tender after the finance minister gazetted mandatory and sole usage of the Zimbabwe Dollar for all local transactions.
Zimbabwe has been using multiple currencies since 2009 when hyper-inflation ravaged the country’s local unit. In 2016, the central bank of Zimbabwe introduced bond notes which traded at par with the US Dollar but have quickly been losing value.
Earlier this year, Zimbabwe introduced a new currency, the RTGS$ with President Emerson Mnangagwa and the finance minister Mthuli Ncube, saying in the past few months that Zimbabwe was set to have a substantive currency of its own.
On Monday, the government issued a statutory instrument saying only the Zimbabwe dollar shall be the acceptable unit for transactions.
“It is hereby notified that the Minister of Finance … has made the following regulations; Zimbabwe dollar to be the sole currency for legal tender purposes,” reads a part of the Statutory Instrument issued on Monday.
It further stated: “With effect from the 24th June 2019, the British pound, United States Dollar, South Africa rand, Botswana Pula and any other foreign currency whatsoever shall no longer be legal tender alongside the Zimbabwe dollar in any transactions in Zimbabwe.”
The SI states that “references to the Zimbabwe dollar are coterminous with references to the following and to no other forms of legal tender or currency – (1) the bond notes and coins, 2.) the electronic currency that is to say the RTGS$”.
It also says the current bond notes and RTGS$ are at par with the Zimbabwe dollar. This has been viewed as effective introduction of a new currency for Zimbabwe, which is currently battling a severe financial crisis.
Companies such as Old Mutual have been accused by allies of President Mnangagwa for fuelling informal market currency rates which have spiked out of control. Early Monday morning, the bond notes were trading around 1:10 against the US Dollar while the official interbank market rate is around 1:6.2.
Other listed companies in Zimbabwe have been facing accounting challenges and several have sought permission from the Zimbabwe Stock Exchange to delay financials following the introduction of the RTGS$ currency in February this year.
“References to the currency of Zimbabwe shall, with effect from the 24th of June 2019 be construed as references to the form of legal tender and the electronic currency with which the term Zimbabwe dollar is,” further notes the government legal notice. -IOL