Source: Using Rand as main currency would be ‘Prudent’ – Mlambo | The Financial Gazette March 23, 2017
By John Viljoen and Godfrey Marawanyika
A central bank official said it would be“prudent” for Zimbabwe to use the rand rather than the U.S. dollar as the dominant currency as the southern African country seeks ways to ease a shortage of foreign exchange.
“We can benchmark pricing with the rand, which we can’t do with the dollar, because we trade almost nothing with the U.S,”Kupukile Mlambo, deputy governor of the Reserve Bank of Zimbabwe, told a gathering of business leaders Wednesday in the capital, Harare.
Zimbabwe abandoned its own dollar in April 2009 as runaway inflation rendered it worthless, using instead a mix of foreign currencies that now includes U.S. dollars, pounds, euros, rands, yuan and Botswanan pula. In an effort to address a shortage of banknotes, the government in November started printing and distributing dollar-denominated notes backed by reserves in the U.S. currency, prompting protests from locals skeptical about
the new currency’s value.
Zimbabwe conducts 60 percent of all its trade with South Africa, according to the country’s Treasury, and three million of its citizens are estimated to live in its southern neighbor after fleeing economic hardship at home. The rand has strengthened about 9 percent against the dollar this year, more
than any other African or emerging-market currency tracked by Bloomberg. Zimbabwe’s largest business lobby group in November
called on the government to adopt the rand as its “reference currency” instead of the dollar.
“We will be happy in the central bank if people use the rand more than they would use the other currencies in the
basket,” Mlambo said. “But because people only store value, they prefer to use the dollar — that’s where the challenge is.” – (Bloomberg)
COMMENTS
A Reserve Bank official using the word “Prudent”! These fellows have no sense of irony.
If you can’t “benchmark prices” with the dollar, how can you assess it to be “uncompetitive”?
Any fool should know that if you gradually reduce your US dollar price until there is a rush for your product, you will – with a total lack of complex financial expertise – have rendered the US dollar “competitive”.
Maybe we might have to ask the South Africans permission before we adopt their currency ?
We have shown that we are unable to manage our own currency ( ZW dollar and bond) and the US dollar.
Surely us Zimbabweans who amongst us number some of Africa’s cleverest people are able to sort out our own problems ?
I think we are not clever, we simply parrot things we do not understand. Otherwise we should not be in the mess that we find ourselves in. Best parrots may be, cleverest beings, definitely not.
It’s not the US$, the Rand or anything else that is the problem. Basically you are ‘Skint’ – you have no real money and it would seem no idea of what to do to correct this.
If you where to use the Rand instead of the US$, the effect would be exactly the same, because the Rand is quotable on the international market. So the money would still leave the country, legit or otherwise and as now there still would be no earnings, so a shortfall of Rand would result.
You cannot spend what you have not got, you can borrow (that is now not possible it would seem because of the black mark you have) you can print sudo money – Monopoly, you can use cyber money . But the real stuff is not there, its all used up. You admit that you are spending over 90% of income on salaries alone. Whatever’ is used, it will not work at that level. What is more the markets all the time are self adjusting to reflect this situation usually adversely. Look at it this way, you buy something with Bond notes or Visa credit. The money certainly gets credited between computer memory. But somewhere the object purchased has to be paid for in REAL quotable money, whether directly or in bits like Fertilizer, Crude oil, Transistors, Pharmaceuticals etc. But there has been no real money used, so that comes out of the reserves – and none goes back into the piggy, because there wasn’t any to go back in. Even the VAT can be argued does not really exist – QED
The only choice (I will say it again) is get hold of the situation and make some very hard and unpleasant hurting decisions. This is known as acute Austerity.
MAZANO REWAYI you always put subject matter into the correct focus.
I enjoy and respect your perspective.
Seven years ago I listened to a BBC Presentation of an interview ( ON WATER SHORTAGES) with the then Mayor Of Harare and he blew it so badly by wandering off the subject matter and waffling on the “intelligence” of the Zimbabweans as compared to the South Africans………………….I was alone in my dwelling, yet I felt an embarrassment like I had never felt before.
I would normally think ” there we go with another arrogant Shona view “.