'Yuan, new currencies wo't ease liqudity crisis'

HARARE - The adoption of new currencies, including the Chinese Yuan, under the multi-currency regime will not ease the country’s acute liquidity crisis, economists say.

In 2009, Zimbabwe abandoned its worthless currency and assumed the multi-currency system — dominated by the United States dollar and South African Rand — in a bid to curb hyperinflation, which had reached 238 million percent.

Charity Dhliwayo, acting Reserve Bank of Zimbabwe (RBZ) governor, on Wednesday introduced currencies of Australia, China, India and Japan to the multiple currency basket, which also includes the Botswana Pula, British Pound and Euro.

“Trade and investment ties between Zimbabwe, China, India, Japan and Australia have grown appreciably. It is against this background of growth in trade and investment ties that in the 2014 National Budget, the Honourable minister of Finance and Economic Development underscored the importance of including other currencies in the basket of already circulating currencies,”

Dhliwayo, who took over from Gideon Gono, said in her 2014 Monetary Policy on Wednesday. “...in addition to opening of accounts denominated in Botswana Pula, British Sterling Pound, Euro, South African Rand, United States Dollar, individuals and corporates can also open accounts denominated in the Australian Dollar, Chinese Yuan, Indian Rupee and Japanese Yen,” she said.

Dhliwayo also reaffirmed the continued use of the multi-currency system and said the monetary authorities have no plans of re-introducing the local currency.

However, economic analysts argued that the move will not relieve the prevailing liquidity crunch.
They contend that trade between locals, and other transactions outside borders, is largely dominated by the greenback and South African Rand.

“There is not going to be any significant impact of introducing other currencies. In as much as we trade with China, most transactions are done in US dollars unless if individuals are purchasing imports like clothing and other products. The move maybe to the advantage of the Chinese who are able to use their currency in our market,” said Albert Makochekanwa, a Univesity of Zimbabwe economics lecturer.

He said it was going to be difficult for retail outlets to easily adopt  to the newly-introduced currencies as people would need more time to appreciate them.

“During the first days conmen are likely to take advantage to some of the unsuspecting transacting public, so people should watch out,” he said.

Comments (6)

ko how far our US dolar nhai Dhliwayo bcoz tirikuda kuziva we a Zimbabweans tisu tichashandisa mucurrencis acho saka ngapajeke ipapo

mwana wamdara - 31 January 2014

Bringing all manner of currencies into the basket will help somewhat but without a substantial cash injection also called FDI or other financial support this just like re-arranging chairs on the deck of the titanic. What I find baffling no end and a tad annoying is the fact that the Finance Minister and his delegation are running to countries they insult everyday with begging bowls in hand..It is like they are trying to collect protection fees from the two countries namely China and the US. with their IMF and World .Now those on the young side might not have heard of "She" or "Chunkie", two famous 70s SA comics of the where gangsters terrorised neighbourhoods for protection fees. This was meant to protect the neighbourhood from the gangsters themselves..what genius! Putting fear of a hundred devils in their victims all they needed do was just send 'debt' collectors ..I hope Chinamasa is not using this script because the Chinese have been able to export quite satisfactorily this lethal practice of theirs called Kung Fu a rather unfriendly practice of using bare hands to break necks and bones. Chinamasa is best advised not try any protection fee gimmicks here. The Americans on the other hand have gained notoriety for their trigger happy gung-ho way of doing things and I would stay clear of collecting any protection fee from them either. Perhaps it might be better to keep this protection fee collection on the continent..I mean our dance-athon friends in the DRC and that other washamacallit country whose whatsname president killed his uncle for the oil (dangerous too no doubt but nowhere near the chinese and Americans). You know more like keeping it in the family on our continent.

gutter poet - 31 January 2014

You people you have all the same kind of sicknss that you can only thinking in Cash.Terms wheras money in Crisis time can't help it. It is time to start being productive and thinking in Asset-Creation-Terms. Because there is no free lunch anymore. Times have changed from now on.

Emperor - 31 January 2014

Its sad the way they do business like they didn't study economics. Investor confidence is lacking. Locally the citizenry aren't banking, liquidity requires direct action.

Munya - 2 February 2014

Hey I am selling my House in Harare for 2,000,000 Yuan,or 4,000,000, rupees-well it will be 10,000,000 yen,but if you are from Aus then 500 000 and it gets crazier and crazier and crazier coming from a crazy Minister of Finance.

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