Zim widens multi-currency basket

via Zim widens multi-currency basket | The Source January 29, 2014

The Reserve Bank of Zimbabwe (RBZ) on Wednesday widened the multi-currency basket to include four more foreign currencies in what analysts see as a way of addressing the cash shortage in the economy.

Currencies of China, India, Japan and Australia are now legal tender, alongside the greenback, South African Rand, Botswana Pula, British Pound and the Euro.

Zimbabwe adopted the multi-currency system in 2009 to curb runway inflation which peaked at 500 billion percent  in 2008 and destroyed its local currency.

“Trade and investment ties between Zimbabwe, China, India, Japan and Australia have grown appreciably. It is against this background of growth in trade and investment ties that in the 2014 national budget, the minister of finance and economic development underscored the importance of including other currencies in the basket of already circulating currencies,” said the acting governor, Charity Dhliwayo in the first monetary policy statement since January last year.

She said exporters and the general public could open accounts in the various currencies in the basket.

RBZ would  also assume its role of banker to government on March 31 and resume its lender of last resort function after government agreed to inherit its $1.35 billion debt and recapitalise it to the tune of $200 million.

“The bank will also be responsible for raising funding for government as and when the need arises,” Dhliwayo said.

In the absence of the lender of last resort, the interbank market was inactive with average money market surpluses exceeding $250 million in 2012 and 2013.

“With a well funded lender of last resort facility, RBZ will accommodate solvent banking institutions experiencing temporary liquidity challenges against acceptable collateral,” she said.

Due to a decline in exports, banks reported a decline in foreign currency receipts by 2.1 percent to $7.5 billion last year compared to 2012.

Foreign payments amounted to $8.9 billion last year compared to $8.2 billion in 2012.

International money transfers received declined by 15 percent to $1.8 billion last year down from $2.1 billion in 2012.

Dhliwayo said the banking sector remained generally stable despite the various underlying macroeconomic challenges and institution specific weaknesses.

Total banking deposits in 2013 amounted to $4.73 billion while loans and advances were at $3.70 billion.

Despite the decline in deposits, the loans to deposit ratio increased to 78.29 percent during the period under review from 37.33 percent  in 2009.

Banks are now required to set aside adequate provisions that reflect the level of credit risk in their loan portfolio.

The banking sector’s average non-performing loans to total loans ratio stood at 15.92 percent as at 31 December last year.

Banks will now be required to maintain capital thresholds that were obtaining in December 2012 of $25 million for commercial and merchant banks,  while building societies  should bring their capital to $20 million;  $15 million for discount and finance houses and $5 million for microfinance banks. Banks and building societies are expected to increase their capital levels to  $100 million and $80 million respectively by December 31, 2020.

Dhliwayo urged banks facing challenges to immediately consolidate or merge, dilute shareholding by potential investors or convert licences to microfinance banks.

She expressed concern over the growth of insider loans which stood at $175.3 million of which $117.4 million or 66.97 percent were non-performing.

- See more at: http://source.co.zw/2014/01/zim-widens-multi-currency-basket/#sthash.4NfmhXb8.dpuf

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12 comments on “Zim widens multi-currency basket
  1. John Thomas says:

    This will not help

    • Ma Hua says:

      Please about this introduction of currencies like Chinese Yuan,,I think Zim fellows/pipol are going to lose n suffer hard time through receiving FAKE Chinese notes. Really does these Zim pple knowz how to distinguish features of Original notes and Fake notes.Truth is, Lot’s n lot’s of Fake notes here in China. Just an added great shame to my Zim friends.Time will tell.Amen

  2. Rukweza says:

    Tactical introduction of chinese currency plus confusion in pricing,zimbabwe will never be a colony.botswana whom we call puppets is using it’s currency,

  3. MikeH says:

    What a fiasco this has turned into. NINE legal currencies !!! What a nightmare and some idiots still say mugabe&co can do no wrong. You can bet your bottom US$, A$, Yen, £, Pula, Rand etc etc that someone will make money from exchange rates. And, of course, how convenient to have the Chinese currency onboard.

  4. bingo wajakata says:

    In fact the other currencies were brought as cover for introduction of the Chinese currency. Come March all civil servants will get their salaries in Yuan. The confusion that will unfold will as usual affect the poorest of the poorest! As Mugarbabe likes you shout “we sure shall never be a colony again, never, ever” but what he does not say is all except a few are going to suffer more than they ever did during the Rhodesian regime. Mugarbage is a failure and he knows it. Its the second reason why he wants to die in power, the first reason being that he is scared of being convicted of killing 20,000 civilians in cold blood.

  5. jobolinko says:

    tHE PRICE OF BEING RULED BY ZANU .

  6. moyokumusha says:

    All needed to buy the Chinese goods so only china will benefit.

  7. Mena Bona says:

    They can use every currency in the world and they will still fail to revive that economy. The million they intend to spend on that old thieves birthday? Which currency are they planning to use for that?

  8. Dayford says:

    Desperate measures

  9. Only Fools says:

    Ok lets see. The Chinese Yuan could be printed in Zim and nobody be the wiser! Who would have thought.

  10. Sekuru Mapenga says:

    Is there any point at all in this move? No, none!

  11. Havanyani says:

    Of all those currencies only the Yuan is not freely convertible on international markets. We are being domesticated into the Chinese economy – a pseudo province.

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