Zimbabwe’s Finance Minister, Mthuli Ncube says the country plans to keep its ailing local dollar, a currency that has lost value every single trading day of the year, even as fiscal and monetary authorities work on revamp plans to aid the currency.
In an interview, Mthuli Ncube said “we will have a domestic currency, there will always be a domestic currency so there is no way that we cannot have one.” “It’s very important to have a domestic currency so that we don’t just rely on foreign currency only for transactions.”
Currently, the American dollar is used for 80% of all commerce in the country.
Citizens use the greenback to pay for everything from food, to fuel and medicines. Ncube added that keeping the domestic currency will help the southern African nation to continue conducting monetary policy.
Over the weekend, the Zimbabwean dollar breached another significant threshold, dropping below 20,000 against the US dollar after its decline past the 10,000 level in late January.
The Zimbabwean authorities have not intervened to halt its drop so far, fueling speculation the local currency is on its way out.
Zimbabwe has the world’s highest benchmark interest rate at 130%.
The Southern African country re-introduced its monetary policy in late 2019 after the local dollar was reinstated the same year after a decade-long hiatus.
Ncube further said that Zimbabwe can only have its monetary policy as a macro-policy if it has its own domestic currency.”
The finance minister explained that the delay in the release of a monetary policy statement is due to ongoing consultations with experts within the government and other stakeholders on the currency revamp as authorities seek their “thumbs up.”
Previously, Ncube has hinted authorities were weighing the use of gold to back the currency.
The Zimbabwean dollar has lost 70% of its value against the greenback since the year began, making it one of the world’s worst-performing currencies.
Meanwhile, the country expects to engage in a staff-monitored program run by the International Monetary Fund in June. It will last for 12 months. Last month, the IMF urged authorities in Zimbabwe to fully liberalise its exchange rate, warning that the currency’s continuing depreciation could pose a risk to economic growth.
The currency is the main sticking point that will be dealt with through the monetary policy statement, and the country has already put in place other reforms.
