Zim bans use of foreign currencies

Zim dollars only: Finance minister Ncube bans foreign currency

Fin24 by Memory Mataranyika

24 June 2019

Zimbabwean dollar bond banknotes. (Photographer: Waldo Swiegers/Bloomberg)

Foreign currencies are no longer acceptable as legal tender in Zimbabwe, with Finance Minister Mthuli Ncube saying Monday that the Zimbabwe dollar is now the only acceptable medium of exchange for local transactions.

This effectively sidelines the multiple currency regime that Zimbabwe has been using alongside the bond notes and the recently introduced RTGS$ currency. In a Statutory Instrument (SI) on Monday, the Zimbabwean Minister of Finance gazetted the official sidelining of the SA Rand, Botswana Pula and US Dollar as legal tender.

"The Zimbabwe dollar shall, with effect from 24th June 2019 … be the sole legal tender in Zimbabwe in all transactions," reads the SI.

The new finance measures have been legally effected under The Reserve Bank of Zimbabwe (Legal Tender) Regulations 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."

It also notes that "the opening or operation of foreign currency designated accounts... shall continue to be designated in the foreign currencies with which they are opened and in which they are operated".

No tampering

Ncube has previously said free funds, and foreign currency accounts for Zimbabwean individuals, organisations and companies will not be tampered with. Zimbabwe is struggling for foreign currency and this has seen the embattled SA northern neighbour experience a financial crisis.

Officials have been battling against steep rises in parallel market foreign currency rates despite introducing an interbank market from which companies have to source foreign currency early this year. However, the interbank market has struggled for liquidity, amid rampaging exchange rates of as high as 1:10 for the RTGS$ against the US Dollar.

In line with the new finance regulations, notes the SI, the following directive has also been issued in terms of valuation for the bond notes and coins as well as RTGS$ against the Zimbabwe dollar: "The bond notes and RTGS$, that is to say, each bond note unit and each RTGS$, is equivalent to a Zimbabwe dollar; and each hundredth part of a bond note unit and each hundredth part of an RTGS$ is equivalent to a Zimbabwean cent."

Last week, President Emerson Mnangagwa was quoted saying Zimbabwe will have its own currency by March next year. He had also heaped praises on Ncube for guiding Zimbabwe to a budget surplus, although he has been heavily criticised for this, especially in light of galloping inflation.