The Zimbabwe Dollar which closed the year 2019 at par with the South African Rand, this week depreciated pointing to bad times ahead of the troubled local currency.
Brought back through the back door as bond notes and coins in December 2014 and November 2016 respectively, but not backed by any production, the local currency was much ‘stronger’ than many currencies across the globe.
The surrogate currency was pegged at par with the United States dollar until October 2018 when Reserve Bank of Zimbabwe (RBZ) governor John Mangudya ordered banks to separate bond accounts from Foreign Currency Accounts.
That was followed by acknowledgement by Finance Minister, Mthuli Ncube, that the RTGS dollars, as the local currency was at one time known, were not equivalent to the greenback.
Since then the local currency, which was on June 24 last year declared the only currency of trade for all domestic transactions, bringing to the end the 10-year period of the multicurrency regime, has been fast depreciating.
According to the parallel market exchange rates, R100 is now equivalent to ZW$105 in cash or ZW$145 in Ecocash or bank transfer.
Economist, Dumisani Sibanda, said the future of the local currency remained uncertain because of numerous challenges associated with it.
“The local currency is hollow as it lacks standard attributes of a currency; trust, store of value, fungibility etc,” said Sibanda.
“It is not supported by reserves and a policy framework which would enable wealth creation. It’s used for transacting at consumer interphase in the economic cycle and is subject to manipulation and corruption.”
He added: “Its long term future is uncertain given pressure to import food, power and other essentials.”