Zimbabwe Central Bank Abolishes Use of Foreign Currencies

(Bloomberg) -- Zimbabwe’s central bank abolished the use of multiple currencies as it tries to curb black-market currency trade that’s contributed to surging inflation.

With immediate effect, the U.S. dollar, South African rand and other foreign currencies will no longer be recognized as legal tender in the southern African nation, the central bank said in an official notice Monday in the capital, Harare.

Key Insights

• Zimbabwe’s authorities have been struggling to close the gap between the official and black-market exchange rates since the government effectively devalued its currency, known as the RTGS dollar, in February and allowed it to trade on the interbank market. The RTGS$ was changing hands at about 13 per dollar on the streets on Harare on Monday, while the interbank rate is 6.32.
• The central bank’s announcement may help stabilize inflation. Prices in Zimbabwe are rising at the fastest pace since a hyperinflation episode a decade ago, when the rate surged to an estimated 500 billion percent.
• President Emmerson Mnangagwa has signaled that the country plans to abandon the multi-currency system introduced in 2009, when it abandoned the Zimbabwe dollar, to underpin efforts to stabilize the economy.

Get More

• How a ‘Giant Ponzi Scheme’ Destroyed a Nation’s Economy
• Zimbabwe Leader Wants New Currency, IMF Loan in Revival Bid

To contact the reporter on this story: Godfrey Marawanyika in Harare at gmarawanyika@bloomberg.net

To contact the editors responsible for this story: John McCorry at jmccorry@bloomberg.net, Paul Richardson, Rene Vollgraaff

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