TAWANDA CHARI
HARARE – The Zimbabwean government announced on Friday that it will maintain the multi-currency system until the end of 2030, extending the original deadline by five years. The decision was made through Statutory Instrument 218 of 2023, which was published in the government gazette.
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| Image: Bloomberg |
The multi-currency regime, which allows the use of foreign currencies such as the US dollar, the euro and the South African rand alongside the local Zimbabwe dollar (ZWL), was adopted in 2009 to curb hyperinflation and stabilize the economy. It was initially expected to expire in 2025.
However, the government's attempt to reintroduce the ZWL as the sole legal tender in 2019 failed to gain traction, as businesses and consumers preferred to use foreign currencies or alternative payment methods such as mobile money.
The ZWL rapidly lost value against the US dollar, leading to shortages of basic goods, fuel and electricity. The economy also suffered from low investment, high unemployment and a severe drought .
Some analysts said that the government's move to extend the multi-currency regime was a pragmatic response to the economic challenges, as it would provide some relief and confidence to businesses and banks. They also argued that the US dollar was too strong for the Zimbabwean economy and that a more suitable currency option should be considered in the long term.
However, others said that the implications of the decision were not clear and that it would take some time for the market to react. They also warned that the multi-currency system could give rise to opportunities for arbitrage and speculation using the ZWL exchange rate.
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