Smoother Transition: RBZ extends validity of old dollar for ZiG launch
The Reserve Bank of Zimbabwe (RBZ) has extended the legal tender status of the Zimbabwe dollar for all domestic transactions until April 30, coinciding with the introduction of Zimbabwe Gold (ZiG) notes and coins. This move aims to facilitate a smoother transition to the new currency system.
Dr. John Mushayavanhu, Governor of the RBZ, emphasized that the 21-day transitional period leading up to the issuance of ZiG notes and coins would be utilized for extensive educational and awareness campaigns regarding the structure and security features of the new currency.
During a Monetary Policy Statement breakfast meeting in Harare, Dr. Mushayavanhu highlighted the stability of the ZiG currency, noting its appreciation in value since its introduction. He also addressed the economic implications of the recent currency changes, stating that the introduction of the new currency rendered the previous 10 percent trading margin by businesses economically irrelevant.
Under the new system, retailers are encouraged to adopt market-determined exchange rates, as excessive markups could lead to pricing themselves out of business. Dr. Mushayavanhu reiterated the importance of maintaining tight monetary policies, floating exchange rates, and occasional interventions to support the currency.
The RBZ’s reserve assets, including cash and gold holdings, are intended to bolster the value of the local currency component of reserve money. Dr. Mushayavanhu expressed confidence in the measures implemented to retain the value of the new currency.
Furthermore, the RBZ aims to increase demand for the ZiG currency through measures such as requiring a percentage of quarterly tax obligations to be payable in ZiG. This strategy is part of a gradual process towards reducing the reliance on foreign currencies and promoting the use of a strong local currency.
Government officials echoed the importance of transitioning towards increased usage of the local currency, emphasizing the need for ministries, departments, and agencies to accept payments in ZiG. The Confederation of Zimbabwe Retailers (CZR) and the Zimbabwe National Chamber of Commerce (ZNCC) expressed support for the measures taken to defend the ZiG currency and ensure stability in pricing and exchange rates.
Economists emphasized the advantages of having a local currency and called for the RBZ to play a supportive role in the economy, avoiding past mistakes and fostering confidence in the financial system.
As Zimbabwe continues its journey towards currency stability and reduced reliance on foreign currencies, the RBZ remains committed to implementing measures that promote economic growth and stability.
