Use other currencies in the basket: RBZ

By Dickson Mangena and Dumisani Nsingo

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. Sunday News