Zimbabwe Ends U.S. Dollar Circulation: Issues New Local Currency For 1st Time In A Decade
People lined up in long queues outside banks on Tuesday, Nov. 12, hoping to get their hands on Zimbabwe’s first local currency to be issued since 2009.
A decade of U.S. dollarization has come to an end as the Zimbabwe Central Bank made the much-anticipated new local banknotes and coins available through local banks and ATMs in an effort to ease the country’s cash shortage, according to Fin24.
When the Zimbabwean currency was severely devalued by hyperinflation in 2008, it was replaced by the U.S. dollar.
Hyperinflation in 2008 had Zimbabweans paying 50 billion Zimbabwean dollars for an egg and 100 trillion dollars for a weekly bus ticket, BBC reported.
New Zimbabwean currency stokes inflation fears
The Zimbabwe central bank has played down fears that the introduction of a Zimbabwean dollar will fuel further inflation. At the moment, inflation is estimated to be about 300 percent, according to the International Monetary Fund.
On Nov. 12, people in the country started withdrawing the new notes, in 2- and 5- Zimbabwean dollar denominations, as well as 2 dollar bond coins.
The new currency was supposed to be available on Monday, Nov. 11, but the introduction was delayed.
Now that the new currency is available, Zimbabweans are frustrated with the central bank’s per-customer withdrawal limits which are set at 300 Zimbabwe dollars a week or $20 in U.S. currency.
That is half the amount a farmer needs to buy a bag of fertilizer amid soaring inflation, IOL reports.
In June 2019, Zimbabwe announced that it would abandon the use of foreign currencies, including the U.S. dollar and the South African rand.
Zimbabwe’s central bank chief, John Mangudya, says the new currency is expected to address liquidity shortages in the economy and regain monetary policy control after years of dollarization.
Twitter was buzzing with opinions from economists and ordinary Zimbabwean citizens who will be impacted by the new currency and the ramifications of its launch.
But not everyone is convinced that this is a good move on the part of Zimbabwe’s central bank. Source