Zimbabwe is to introduce a new Zimbabwe dollar next month to inject cash into the market which has seen those with access to cash in the form of bond notes and coins cashing in on the shortage by charging premiums of up to 60 percent.
The central bank said the cash injection would not change the money supply as banks will simply be asked to exchange their existing RTGS balances to cash.
Zimbabwe requires between $1.5 billion and $2.25 billion in circulation but currently has just $500 million.
The cash injection was announced by the central bank governor yesterday but he did not give a date which was disclosed by a member of the Monetary Policy Committee Eddie Cross.
The market has not yet reacted to the news but questions must be lingering in most people’s minds as to what will happen to the bond notes and coins that people are currently using.
Those hoarding cash might panic as it is not clear what will happen to their money. It is now safer to have you money in the bank than physically.
Zimbabwe has been battling a serious cash crisis since it reintroduced a local currency which was previously at par with the United States dollar but has been allowed to float.
Cash barons started playing havoc in the market with the local currency at one time falling to 25:1 before the central bank froze accounts of several companies that it alleged were fuelling the black market.
It also banned cash-ins, cash-outs and cash-backs by mobile money agents and merchants but lifted the ban after only two days.