ZIMBABWE – Despite the country having no official currency of its own for the past six years, Zimbabweans have lately become unsettled about using the rand, which has fallen to its lowest levels against the US dollar in more than a decade.
Last month, the South African currency was rejected as a form of payment for commuter fares in Zimbabwe’s Midlands province.
Economists warned that the trend may worsen. “It’s a sad way of dealing with the problem. A more responsible action would be to rate it at market value, rather than totally reject it. Vendors on the streets are also refusing it completely, so we are going to see it disappear in a few months,” said Vince Musewe, an independent economist in Harare.
Any rand recovery appears to be a long shot. I t fell to its lowest levels yet of $1 to R14.44, on Monday before staging a mild recovery.
The Zimbabwe dollar was abandoned by authorities in February 2009 in favour of a basket of currencies that include the US dollar, the rand, the Botswana pula and British pound.
Officially, the US dollar has been the base currency used for all government transactions, but the rand until now had enjoyed equal status with the greenback due to the high trade volumes and proximity between South Africa and Zimbabwe.
South Africa is Zimbabwe’s largest trading partner.
In a public notice at its stores, OK Zimbabwe states: “Please be advised that we no longer accept rand coins as legal tender, due to circumstances beyond our control.”
In place of the rand coins normally used as change in the absence of US coins, the retailer is accepting only bond coins, which were introduced by the Reserve Bank of Zimbabwe last year.
Last week, the bank said it was holding bond coins worth $1-million in its vaults and the money could easily be deployed in the market to offset any imbalances that might result from the wholesale rejection of the rand.
Central bank governor John Mangudya said what was happening with the rand coins was only natural because the value of the rand had been falling.
“Businesses do not want to incur exchange rate losses,” he said.
Meanwhile, the Zimbabwe Stock Exchange-listed OK Zimbabwe recorded a 71.6% decline in profit year on year for the half-year to September 30, to $1.2-million.
CEO Willard Zireva told a briefing of analysts that there had been an increase in the number of new entrants in the retail sector, namely, Meikles Mega Store, the Botswana grocer Choppies and South Africa’s Food Lover’s Market.
The expansion of the Pick n Pay brand had also added to the competition, he said.