New coins to help ease Zimbabwe cash crunch

GMT 02:50 2014 Saturday ,06 December

Arab Today, arab today New coins to help ease Zimbabwe cash crunch

Higher denomination Zimbabwean dollar bills
Harare - AFP

Zimbabwe's central bank unveiled special coins on Friday to ease a shortage of low denomination cash, which has forced shoppers to accept sweets or pens in lieu of change.
"The bond coins are going to be issued in denominations of one cent, five cents, ten cents, 25 cents and 50 cents," Zimbabwe's Reserve Bank Governor John Mangudya said at a news conference in the capital Harare.
He said the coins would be equal in value to US cents, "trading one for one".
Zimbabwe switched to a multi-currency system in 2009 after hyperinflation rendered the local dollar worthless.
The country now uses the US dollar, British pound, South African rand, Botswana pula, Japanese yen, Chinese yuan, Indian rupee and the euro, among other currencies.
Eighty percent of the transactions in the economy are made using the US dollar, according to the central bank.
The adoption of multiple currencies helped Zimbabwe stem hyperinflation -- which struck 231 million percent in 2008, before the government stopped counting.
Mangudya said the introduction of the coins would lower prices, as most businesses had rounded up to the next dollar during the change shortage.
"You know that in the shops you were getting sweets, you were getting pens as change and that we cannot have. We want to bring decency in Zimbabwe."
The central bank chief said the special coins would be introduced on December 18 and could be exchanged for US dollars, but they could only be used in the southern African nation.
He said the country could not import US coins to solve the shortage due to exorbitant costs, but refuted speculation the new coins were a way of introducing the discarded Zimbabwean dollar.
"We can never be so careless to bring back the local currency," he said. "We have no appetite to do so, and we can't be careless to do so and we won't do that."
Zimbabwe's economy has been on a downturn for over a decade, characterised by high unemployment.
A liquidity crunch has forced companies to shut down, downsize or migrate to neighbouring countries, while an indigenisation law which forced foreign companies to cede majority shares to locals scared off foreign investors.

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