A SENIOR Reserve Bank of Zimbabwe (RBZ) official has said it would be “prudent” for the country to use the Rand rather than the US dollar while a cabinet minister believes the South African currency is already taking over by default.
“I think Zimbabwe is already joining the Rand monetary union by default because the Rand is increasingly gaining usage in our multiple currency basket,” Tourism minister Walter Mzembi told the BBC’s HardTalk programme in London earlier this week.
Zimbabwe has continued to struggle with cash shortages despite the central bank introducing bond notes which were said to have the same value as the US dollar.
Mzembi said he had always advised cabinet colleagues that equating the bond note value to the US dollar would not work.
“I have absolutely nothing to be ashamed of in terms of the ideas that I have advanced because they work; they are economic ideas that have been tested elsewhere,” he told the BBC.
He added: “I would have equated the bond not the Rand and I still make that argument up to this very day”.
Asked whether anyone in cabinet was listening to him, the minister said: “When we dollarised the Zimbabwean economy (in 2009), we did that as government well after the people had already moved and shifted to the US dollar.
“Markets are going to shift to what works; markets speak louder than our own wishes. It’s going to happen; they will listen in the fullness of time.”
And perhaps they are beginning to listen.
Deputy RBZ governor Kupukile Mlambo told business leaders in Harare Wednesday that Zimbabwe should use the Rand as the dominant currency rather than the US dollar.
“We can benchmark pricing with the rand, which we can’t do with the dollar, because we trade almost nothing with the US,” Mlambo was quoted as saying by Bloomberg.
“We will be happy in the central bank if people use the rand more than they would use the other currencies in the basket.
“But because people only store value, they prefer to use the dollar — that’s where the challenge is.”
According to Bloomberg, the Rand has strengthened about 9 percent against the dollar this year, more than any other African or emerging-market currency.
Mzembi said switching to the Rand monetary union was only logical since Zimbabwe conducts around 70 percent of its trade with its southern neighbour.