قالب وردپرس درنا توس
Home / World / Why Zimbabwe has banned foreign currencies

Why Zimbabwe has banned foreign currencies



  In a street in Harare, Zimbabwe, a headline from a local newspaper banning foreign currency is displayed.

Copyright
EPA

The Zimbabwean government has taken the controversial decision to ban local foreign currency trading, including the US dollar, with immediate effect.

It also reintroduced the Zimbabwe dollar, which was abandoned in 2009 due to hyperinflation, when the country introduced mainly the US dollar and the South African rand.

The move shocked Zimbabweans who believe little in a local currency ̵

1; The exchange rate when the Zimbabwe dollar was scrapped was $ 35 trillion at $ 1.

What prompted the move?

The economy is a mess. Almost everything is imported and there is a shortage of physical cash. The cost of living is very expensive. Unemployment is widespread.

Image Rights
AFP

Caption

Zimbabwe's ancient currency became worthless

Various measures have been taken to solve the problem, including the introduction of bonds in 2016, a parallel currency accepted only in Zimbabwe.

It was formally tied to the US dollar, but in reality worth far less – thus, a thriving black market developed and Zimbabwe became a cashless society based on card-based transactions or mobile money trading.

You may also be interested in:

In February, bonds and electronic cash were renamed RTGS Dollars and allowed to float to try to smash the black market.

However, workers who got it earlier their salaries paid in US dollars have found that their salaries paid in RTGS dollars can not keep up with inflation – now at 100%.

People were often expected to pay for goods in shops and services, for example, for doctor's fees in US dollars.

President Emmerson Mnangagwa said the ban was "an important step in restoring the normalcy of our economy."

"While the multi-currency regime helped stabilize the economy, it did not give us control over monetary policy and left us with US dollar pricing, which was one of the main causes of inflation," he added Dollars are so strong, the production of goods locally is expensive, which is why companies prefer to import goods.

What was the reaction?

anger and anger.

Copyright
EPA

Caption

Some retailers have created new price lists: Here, an iron, which usually costs around $ 30, costs $ 104

Most people who associate the Zimbabwean dollar with food shortages and out-of-control inflation have complained about the lack of warning. RTGS officially became the Zimbabwean Dollar on Monday, the only legal tender.

"We should have our own currency, but they should not have abolished it as if they were hitting a fly, they should have notified us." A man told the BBC.

Supermarkets and formal businesses responded the day after the announcement by issuing new prices in Zimbabwean dollars, which were, however, unaffordable for many.

A first-time medical consultation now costs Z $ 1,800 – more than a Euro teacher or nurse earns in a month.

Informal traders who control the economy and need dollars for imports have vowed to defy the rule.

A street vendor in the capital, Harare, told the BBC: "How is it possible that the US dollar will no longer be accepted? It will not work, we actually want more use so we can have it as a street vendor Instead, scrap the debt. "

Opposition movement for Democrats Change (MDC) legislator, David Coltart, called the move" sheer madness. "

"The market has re-dollarized because of the lack of confidence in the RTGS dollar, you can not force people to love a currency … it will make the chaos worse," he said on Twitter .

Will the objections make a difference?

The unions have threatened "mass actions" if the policy is not reversed.

Image Rights
Getty Images

Caption

After a rise in fuel prices in January, riots broke out

The Zimbabwe Trade Union Congress (ZCTU) wants the workers paid back in US dollars.

In January, he led nationwide protests against a 150% increase in fuel prices, triggering a crackdown by the army and police According to human rights groups, at least 12 people are dead.

Black market traders exchange and accept on the streets of the capital still US dollars.

The value on the black market has remained unchanged – one dollar is worth 11 Zimbabwean dollars, compared to the official rate of 6.2.

Ultimately, over the years, Zimbabweans have adapted well to one economic crisis after another.

Why do Zimbabweans prefer foreign currencies?

They are drawn from the mismanagement of the economy by the government of then-President Robert Mugabe. The central bank was forced to print banknotes of ever higher value to keep up with rising inflation

The annual inflation rate reached 231 million percent in July 2008. In mid-November 2008, officials dropped monthly statistics to a peak of nearly 80 billion percent.

The commodity prices multiplied several times daily. Although it was illegal at the time, many people chose to keep US dollars they had bought on the black market.

Companies demanded foreign exchange. Eventually, the authorities had to catch up, scrap the Zimbabwean dollar, and authorize the use of several currencies, including the Chinese yuan and the Indian rupee.

You could buy something with one currency and change another currency.

In fact, in Zimbabwe all these currencies ran out because they imported far more than they exported – and became a cashless society.


Source link