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RTGS dollars: Zimbabwe’s new currency

Published

5 years ago

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John Mangudya

The Reserve Bank of Zimbabwe has with immediate effect denominated bond notes and coins replacing it with what they called RTGS dollars.

Zimbabwe’s quasi-currency, the bond note — which has been pegged at par with the United States dollar since its introduction in 2017 — is now subject to market forces after monetary authorities announced the establishment of an inter-bank foreign exchange market.

Presenting the country’s monetary policy, Zimbabwe’s central bank governor John Mangudya said the inter-bank forex market will bring sanity in the foreign currency market whilst at the same time promoting exports, diaspora remittances and investments for the good of the economy.

Exchange Rates
Last updated: 29 Apr 2019
100 USD = 500.0 RTGS (400.0%)
100 USD = 360.0 Bond (260.0%)
100 Bond = 115.0 RTGS (15.0%)
100 USD = 1431.0 ZAR (1331.0%)

Mangudya said the move not to fix the rate of the local currency was taken after considering the accounting, financial, economic, legal and social implications of the move within the context of the current national payment systems made up of RTGS, mobile payment platforms, point of sale (POS), bond notes and coins.

He said the country was now denominating the existing RTGS balances, bond notes and coins in circulation as “RTGS dollars.”

“After taking account of the implications and putting in place safeguards to maintain stability in the fares market, the Bank is, with immediate effect, establishing an inter-bank foreign exchange market in Zimbabwe to formalise the trading of RTGS balances and bond notes with US dollars and other currencies on it willing-buyer-willing-seller basis through banks and bureaus de change under the following framework,” he said.

Mangudya said this will eliminate the existence of the multi-pricing system, hence prices should remain at their current levels or to start to decline in sympathy with the stability in the exchange rate given that the current monetary balances have not been changed.

He said bureaux de change will be authorised to purchase foreign currency without limits but shall be limited to sell foreign currency for small transactions such as subscription, business and personal travel up to a maximum aggregate daily limit of US$10 000 per bureau de change.

Economist John Robertson said the interbank foreign currency market will stabilise the economy.

“It’s going to work better, floating is the right thing. They are avoiding the parallel market. This brings certainty and stability,” he said.

“Prices are likely to stabilise and some prices are going to come down as goods were now being sold at four times the rate.
The only question is, will Government get the rate at the same rate as others or it will stick with 1:1. If they stick with 1:1, it opens the way for corruption.”

Sifelani Jabangwe, the president of the Confederation of Zimbabwe Industries, said business had been agitating for the floating of the currency.

He said due to corporate governance issues before the latest announcement businesses were not able to go to the black market where forex was found, hence some had closed while others were not operating at full capacity.

Jabangwe said the move will also help to bring investment into the country as investors were staying away not sure about the true value of their money that they would be bringing into the country.

“Businesses wanted to trade legally with something that is officially not a rate that was set by someone under a tree or on the street,” he said.

Businessman and former Movement for Democratic Change (MDC) senator Eddie Cross said the move is likely to kill the forex black market. “Inflation is likely to go down,” he added.

However, former finance minister and senior MDC official Tendai Biti said the move will devalue people’s savings and is open to litigation.

“Further floating exchange rate & retention of the bond note will guarantee the continued existence of a key pillar of #corruption in this economy. ZANU #elites will continue raiding the RBZ for cheap foreign exchange which they will arbitrate. Real reform is ejecting #bond note,” Biti posted in a thread on Twitter.

“#Liberalizing or #floating exchange without ring-fencing RTGS balances will have the disastrous consequences of devaluing people s balances. #Floodgates of litigation will open. The RBZ will be held to account after maintaining & defending the #fiction of a bond, US $ parity.”Mail and Guardian

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INTERNATIONAL

African Union’s Inclusion in G20: A Significant Acknowledgment of a Continent with 1 Billion Inhabitants

Published

3 months ago

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11/09/2023

By

african-union-g20

The world’s most powerful economies, the G20, have welcomed the African Union (AU) as a permanent member, recognising Africa’s more than 50 countries as important players on the global stage. US President Joe Biden and Indian Prime Minister Narendra Modi both expressed support for the AU’s permanent membership.

The AU has advocated for full membership for seven years and, until now, South Africa was the only African country in the G20. The AU represents a continent with a young population of 1.3 billion, which is set to double by 2050 and make up a quarter of the world’s population.

Africa’s 55 member states have long pushed for meaningful roles in global bodies, including the United Nations Security Council, and want reforms to the global financial system. The continent is increasingly attracting investment and political interest from global powers like China, Russia, Gulf nations, Turkey, Israel, and Iran. African leaders are challenging the framing of the continent as passive victim and want to be brokers instead.

They seek fairer treatment by financial institutions, delivery of rich countries’ long-promised $100 billion a year in climate financing for developing nations, and a global tax on fossil fuels. The AU’s full G20 membership will enable it to represent a continent that’s home to the world’s largest free trade area and abundant resources needed to combat climate change. The African continent has 60% of the world’s renewable energy assets and over 30% of the minerals key to renewable and low-carbon technologies.

African leaders want more industrial development closer to home to benefit their economies. Finding a common position among the AU’s member states, from economic powers to some of the world’s poorest nations, can be challenging, but Africa will need to speak with one voice to influence G20 decision-making. African leaders have shown their willingness to take collective action, as seen during the COVID-19 pandemic. As a high-profile G20 member, Africa’s demands will be harder to ignore.

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BUSINESS

Forging Strong Bonds: Iran and Zimbabwe Deepen Economic Ties in Raisi’s Africa Tour

Published

5 months ago

on

13/07/2023

By

Zimbabwe and Iran

On Thursday, Zimbabwe and Iran signed 12 memorandums of understanding to strengthen their bilateral ties during Iranian President Ebrahim Raisi’s visit to Africa. Raisi had previously visited Kenya and Uganda before meeting with Zimbabwean President Emmerson Mnangagwa in Harare. Among the 12 MOUs is a plan to establish a tractor manufacturing plant in Zimbabwe with the help of an Iranian company and a local partner. The two countries also signed agreements for cooperation in energy, agriculture, pharmaceuticals, and telecommunications, as well as research, science, and technology projects.

Mnangagwa expressed his appreciation for investments in several sectors of Zimbabwe’s economy to reporters after the signing ceremony. However, he did not disclose the amount of investment Zimbabwe is expecting from Iran. Raisi mentioned the economic challenges facing Iran and Zimbabwe due to U.S. sanctions but emphasised his country’s efforts to build closer economic ties.

According to Iran’s foreign ministry, trade with Africa is expected to exceed $2 billion this year, but there was no comparison to the previous year’s figures. This African visit is the first by an Iranian leader since 2013, following a visit to three Latin American countries in June, all of which are also affected by U.S. sanctions.

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BUSINESS

Breaking News: E-Creator Fraud Ring Leader Apprehended by Police

Published

5 months ago

on

13/07/2023

By

Zhao Jiaotong

The Zimbabwe Republic Police is requesting that individuals who have been deceived by E-Creator, Zhao Jiaotong come forward and report to the nearest police station.

According to police spokesperson Assistant Commissioner Paul Nyathi, the kingpin of the E-Creator Ponzi scheme has been arrested on charges of fraud. The suspect is identified as Chinese national Zhao Jiaotong, who is said to be the founder of the notorious platform that has scammed people out of thousands of dollars.

Nyathi stated, “The Zimbabwe Republic Police confirms the arrest of Zhao Jiaotong, 39, in connection with a case of fraud in which unsuspecting members of the public were duped through the E-Creator Ponzi scheme.”

The police are urging anyone who may have fallen victim to E-Creator to report to their nearest police station. Additionally, the public is encouraged to exercise caution and perform thorough research before investing in any Ponzi or pyramid schemes that promise quick returns.

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