Zimbabwe: Introduction of Zimdollar to Sink Economy, Say Analysts

The decision by government this week to abolish the multi-currency regime and re-introduce the Zimbabwean dollar as the sole legal tender could be catastrophic as the local currency’s value may tumble against major currencies, plunging the country into hyperinflation.

While some captains of industry and analysts welcomed the move, others were sceptical and critical.

The Zimdollar, which was initially abandoned in 2009 after being ravaged by severe hyperinflation, this week became the country’s sole currency through Statutory Instrument (SI) 142 of 2019, known as the Reserve Bank of Zimbabwe RBZ (Legal Tender) Regulations.

In 2016, government introduced the bond currency to the basket of currencies, a fiat currency which was ostensibly meant to incentivise exporting firms.

“These regulations may be cited as the Reserve Bank of Zimbabwe (RBZ) Legal Tender Regulations 2019. Subject to Section 3, with effect from 24th June 2019, the British pound, United States dollar, South African rand, Botswana pula and any other foreign currency whatsoever shall no longer be legal tender alongside the Zimbabwe dollar in any transactions in Zimbabwe,” part of the SI said.

“Accordingly, the Zimbabwean dollar shall, with effect from the 24 June, 2019, but subject to Section 3, be the sole legal tender in Zimbabwe in all transactions.”