Zimbabwe bank boss backs South African rand rejection but says country won’t block its use

Zimbabwe’s central bank governor John Mangudya says businesses can reject the South African rand because of its volatile exchange rate to the United States dollar but it still remains legal tender in the country.

“We’re in a multiple-currency system, which provides choice to consumers on what currency to use. If businesses feel there are losses attributed to a particular currency, you can’t force them to use it,” Mangudya told the Bulawayo daily, The Chronicle.

“Our position is that it’s not a crime to manage risks associated with a certain currency. What’s important is that as RBZ we’re providing Easylink platforms across the country where people can exchange their rands to bond coins or dollars.

“This is meant to ensure that people don’t lose value for their money. It’s like an official bureau de-change facility. They can also use banks.”

The South African rand, which used to be a preferred currency in areas like Bulawayo, Gwanda and Beitbridge has been steadily losing value against the United States dollar – the main currency in Zimbabwe- falling from $1:R10 when Zimbabwe introduced multiple currencies in 2009 to about $1:R14.30 today.

Mangudya said what businesses were doing was normal but there was no way Zimbabwe could block the use of the rand.

“What businesses are doing is a normal and rational business move. However, we want to maintain the multiple currency system but ensure people don’t lose value for their money. That’s why our prices are indexed in US$ with other currencies –the rand, yuan, pula and others being used for trading purposes,” he said.

South Africa is Zimbabwe’s biggest trading partner and the weakening rand is causing havoc in Zimbabwe as South African goods are getting cheaper than local products by the day.

(119 VIEWS)