Source: Use other currencies in the basket: RBZ – Sunday News Mar 12, 2017
Dickson Mangena and Dumisani Nsingo, Business Reporters
CAPTAINS of Industry have said the increased circulation of the rand in the country will sway the public’s mindset from solely relying on the diminishing United States dollar for transactional purposes and enhance the country’s export competitiveness with its trading partners.
Confederation of Zimbabwe Industries (CZI) president Mr Busisa Moyo said the Government through the Reserve Bank of Zimbabwe (RBZ) should not necessarily join the Rand Monetary Union but should put in place modalities to increase the availability of the rand in Zimbabwe.
He said this while addressing economics students from seven high schools at an Economics Seminar at Petra High School in Bulawayo.
“If you increase the circulation of the rand the thinking of people switches to the rand such that people start pricing in rand and start to think of costs in rand. This will also allow us to bench mark because (at the moment) the costs are very high, the reason that we can’t see it is because our thinking is in US dollars.
“Once we convert to rand, we force thinking to the rand, there is one benefit in benchmarking (prices) and competitiveness of exports. The other benefit is circulation. We are struggling with the US dollar that doesn’t stick…it goes straight out. The rand doesn’t have the same flight risk, so we will have a currency circulating, it’s an alternative,” said Mr Moyo.
He said with the Reserve Bank of Zimbabwe only releasing 200 million bond notes into the market there was need for the rand to cover the $400 million gap to ensure the country reaches its target of having $600 million in circulation.
“The bond note is only going to be 200 million (in the market) when we need $600 million in circulation, so we need the rand to bridge that gap. Load ATMs (Automated Teller Machines) with rand, it’s better than having nothing. Prices and school fees in Zimbabwe are way expensive than those in South Africa and it’s because of lack of appreciation of the US dollar. That’s why we say the rand is much better in terms of competitiveness,” said Mr Moyo.
RBZ Deputy Governor Kupukile Mlambo said there was need for Zimbabwean to embrace the use of multiple currencies further stating that the rand should be the most used currency in the country since South Africa was Zimbabwe’s biggest trading partner.
“The thinking of the CZI is correct. We don’t need to concentrate on the US dollar as the transaction currency. We should use other currencies in the basket. South Africa is our biggest trading partner so we need to see more and more trade between us and South Africa to be connected with the rand.
“We tried to do that when the governor (Dr John Mangudya) announced the measure on 4 May last year. One of them was that he wanted banks to surrender part of their US dollars and buy them in euros and rand. That was a plan of saying let’s bring in the use of other currencies into the market also. However, there was so much opposition…that was the plan but the banks and the public didn’t seem to like it,” said Dr Mlambo.
He said even if the rand increased in circulation more than the US dollar accounting would still be done using the latter currency.
“We would be very happy if the circulation of the rand increases. The increased circulation of the rand will still mean we account in US dollar but we transact in both the US dollar and the rand,” said Dr Mlambo.
COMMENTS
Explain, Mr Moyo, how the rand ‘bridges the gap’ between 200 million and 600 million. Give us the financial details of where the missing 400 million actually comes from. Are you, by the way, standing for election for Zanu PF next year?
This is all nonsense, the issue is simple the country for a start needs to be productive a need to control externization. (The govt the main culprites mind you). Chinamasa and his governer are failing, because people do not trust you or have any faith in what you are trying to do. You will never succeed.
Everything will still be priced in US$, so we will be left at the mercy of the manipulative exchange rates if we use the Rand or any other currency. It starts at the bank, the ATM’s and carries on through to the supermarkets and shops. At the bank it is$8.15 for ZAR100, ((R12.26 for US$1) when it is listed on all sites as R13.2 for $1; then the supermarket will use an exchange rate of R13; hardware shops etc will use R14 against the US$$. By then end of the day you will have been screwed 5 times to R100 = $7.14 The flight risk for the Rand is as big as the flight risk for the US$, because South Africa is closer to Zim than Europe or the Middle East. You can either walk to SA or take a short drive, something you can’t do to Europe or the Middle East or even the Far East. Moyo, is staunchly pro Zanu Pf and as stupid as them.. That’s why nobody listens to the CZI anymore.
Wrong Erectus. You analysis is flawed tooth and nail.
Accounting is the only process done in USD. However transacting within the economy would be done in South African Rand. This eliminates internal exchange control risks to the Accounting phase rather than at the transacting level.
Flight risk for the USD is higher because of its international relevance. The country does not have foreign currency because the Chinese have moved their cash out by the droves. The difference with the regional currency is it is relevant within Southern Africa but does not offer opportunity for interested parties to move it around the world. It is more stagnant than the USD from an International demand point of view.
You should listen to what they are saying more closely. Currently trading between Zim and SA is being done predominantly in USD further straining the scarce nostro reserves. using the Rand for Intra-regional trading would assist in reducing the pressure on our USD reserves and this can only be promoted from use of the regional currency as the main medium of exchange. Rand accounts can be opened for the general public for purposes of transactional banking.
Hi homo, I’ve read your comment closely and can make no sense of it other than to agree that the USD is more in demand internationally than the rand – except that you are suggesting that it should now be less in demand in Zimbabwe. The hominid species to which you claim affinity actually has an ‘s’ at the end, such that, if you were more sapient, you would know it is ‘sapiens’. My guess is that you are a supporter of Zanu PF, whose members are largely intellectually related to homo neanderthal, a species thought until recently to have been extinct prior to its re-emergence on the Zimbabwean plateau.
Happy accounting and transacting.