Zimbabwe ban use of foreign currency as legal tender

The Zimbabwe government has banned the use of foreign currency as legal tender alongside the local RTGS dollar, in an apparent bid to arrest galloping increases of prices of basic commodities and other goods and services.

However, payment for international airline services in foreign currency will still be allowed. Finance and Economic Development Minister, Mthuli Ncube announced the ban yesterday.

“With effect from the June 24, 2019, the use of the British Pound, United States Dollar, South African Rand, Botswana Pula and any other foreign currency whatsoever, shall no longer be legal tender alongside the Zimbabwe Dollar in any transactions in Zimbabwe,” the minister said in a statutory instrument (SI).

Ncube said this means that the Zimbabwe Dollar, which is at par with the RTGS Dollar and the bond notes and coins, would be the sole legal tender with immediate effect.

Zimbabwe, which abandoned its local currency, the Zimbabwe Dollar, in 2009, following years of hyperinflation, has been using a basket of nine multi-currencies dominated by the U.S. Dollar.

The others are the British Pound, the Euro, the Chinese Yuan, the Australian Dollar, the Indian Rupee, the South African Rand, the Botswana Pula and the Japanese Yen.

The SI said the new regulations do not affect the opening or operation of foreign currency-designated accounts, which shall continue to be designated in the foreign currencies with which they are opened and in which they are operated, or the making of foreign payments from such accounts. 

Also not affected is the requirement to pay customs duties and value-added tax in any of the foreign currencies for goods specified under the law to be luxury goods.

A serious shortage of foreign currency has spurred a black market where the U.S. Dollar was yesterday trading at 1:11 RTGS dollars at the minimum, while the official interbank rate was around 1:6.

President Emmerson Mnangagwa said last week that Zimbabweans should expect to start using a new local currency by the end of 2019 or the first quarter of 2020, as the government has made strides putting in place macroeconomic fundamentals needed before its re-introduction.

He said the current scenario, where Zimbabwe has no control over the supply and availability of the currencies in use, is unacceptable. –Xinhua  

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