Multiple currency regime to stay, says RBZ chief

HARARE - Reserve Bank of Zimbabwe (RBZ) governor John Mangudya has said Zimbabwe will continue using the multiple currency system for the foreseeable future.

Mangudya yesterday told the parliamentary portfolio committee on Finance and Economic Development that the multiple currency system had stabilised the economy.

“Our advice on the issue is that let us maintain the multiple currency system because it has brought stability and discipline,” Mangudya told the committee, chaired by Mutoko South Zanu PF MP David Chapfika.

“I think we are now disciplined as a country compared to the Zimbabwe dollar era.”

This comes as Finance minister Patrick Chinamasa recently indicated that he does not foresee the immediate return of the shelved Zimbabwean dollar.

The country adopted a basket of multi-currency in 2009, dominated by the United States dollar, to replace the local currency which had been devastated by inflation which reached a peak of 238 million percent by August 2008.

However, since the re-election of the Zanu PF-led government last year, there have been consistent calls of a Zimbabwe dollar return by some politicians to help ease liquidity challenges in the county.

But Mangudya yesterday emphasised the continuation of the multiple currency regime, saying it would help economic recovery.

Zimbabwe’s economy, which registered an average of seven percent growth between 2009 and 2012 during the inclusive government era, is slowly receding into recession due to low aggregate demand, an acute liquidity crisis, deflation, massive power shortages and company closures among other things.

As part of efforts to combat the biting liquidity situation in the country, the central bank early this year added the Chinese Yuan, Japanese Yen, Indian Rupee and Australian dollar to the basket of foreign currencies which include the South African Rand, Botswana Pula, the British Pound and the Euro.

Mangudya, however said there has been low uptake of the four additional currencies as people prefer to trade in the USA dollar, the Rand or the Sterling pound.

“We have  a basket of these multi- currencies including the new ones we introduced early  this year...and few people opened accounts for them…but they are still being accepted in the country,” he said.

The former CBZ chief executive, who began his duties at the central bank on May 1, also said RBZ would soon play its role as the bank of government and lender of last resort.

“It’s now back to basics in terms of banking,” he said, adding that the central bank would by July 15, 2014 resume its role as banker to government.
 
“We are currently doing the transfer of the account from CBZ in an orderly fashion so that we minimise disruption of banking activities,” he said. “We don’t believe in doing things abruptly.”

Mangudya replaced former Reserve Bank governor Gideon Gono who retired in November last year after a decade on the helm.

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The RBZ governor is right.We can never talk of bringing back Zim dollar when our industry is so depressed.What would have been the situation today if we had been using the Zim dollar?After all we are unable to print that currency anyway.

GANYAMATOPE - 2 July 2014

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