Rand rejection sounds death knell

HARARE - The continuing rejection of the South African rand by some of the country’s largest retail operators will have a negative impact on the Zimbabwean economy, an Oxford think-tank has warned.

Businesses are rejecting the use of rand coins over weakening value.

The Oxford think-tank, NKC African Economics (NKC), said the move will cause more problems to the already dying Zimbabwean economy.

“This will continue to place downward pressure on domestic consumer prices — a weaker rand makes imports into Zimbabwe cheaper. While consumers will not complain about price deflation, local productive capacity is under strain from being unable to compete with imports flowing into the country at a lower cost than similar goods produced locally,” the report reads.

“The country is too dependent on trade with South Africa and cash remittances from south of the border to take such a step.

“The refusal to accept the rand as legal tender will add to the number of companies accepting only US dollars for their goods and services. While the rand is expected to appreciate somewhat during 2016, the medium-to long term outlook for the currency is still based on a depreciatory trend.”

The report also added that tens of thousands of Zimbabweans living and working in South Africa will return home during December and January for holidays, bringing in  rands.

Many people now prefer to transact with bond coins rather than rands.

Bond coins were introduced by the central bank in December last year to ease the acute shortage of change but consumers were initially reluctant to use the coins, which have now become the instrument of trade of choice.

Comments (2)

The rand coins are real money, bond coins aren't!

citizen - 26 November 2015

yes we know @citizen so whats your point?

wilo - 27 November 2015

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