Friday, 10 June 2016

RBZ to import small US$ denominations

THE Reserve Bank of Zimbabwe will import, largely, low dollar denominations to curb the incessant large scale outflow of US dollars.

 This comes as the central bank is working on introducing bond notes, backed by a $200 million Afreximbank facility to bridge the cash and liquidity gap and also provide an export incentive to stimulate and grow the economy.RBZ foreign exchange control director Mr Morris Mpofu said large denominations such as the $50 and $100 notes appeal to people who are moving the cash out of the country.

Mr Mpofu said that this is largely because the dollar is attractive to international criminals and others who are hunting it while there is concentration pressure from the predominant use of the greenback as the transacting currency.
RBZ to import small US$ denominations
The US dollar accounts for over 95 percent of all transactions in Zimbabwe although the country uses a basket of currencies that also include the South African rand, where the bulk of imports come from and exports go.

According to the RBZ’s monetary policy, a total of $1,8 billion was taken out of Zimbabwe in 2015 alone through illicit financial outflows and together with the huge import bill, have worked to create the cash and liquidity problems.

“That is why, now, we are going to import small denominations; $1, $5, $10 and $20, which they cannot take out.

The $100 and the $50 (notes) are what they get attracted to and they ship it out (of Zimbabwe) anytime.

“(But the small denominations) they are heavy, they are bulky so it is not easy to carry them in a briefcase for purposes of moving huge amounts of money (especially much sought after US dollars out of Zimbabwe), Mr Mpofu said.

The RBZ exchange control director was briefing Acting Japanese Ambassador to Zimbabwe Dabide Tsunakake who sought clarity on what he said were some of the fears among investors from Japan looking to invest in Zimbabwe.

The investors’ concerns included the plans to introduce bond notes, general macro-economic situation and the indigenisation and economic empowerment policy position.

The rampant illegal shipping of the greenback out of the country, Mr Mpofu said, had created shortage of cash and liquidity, which the RBZ is addressing in a number of ways.

He stressed bonds notes were not only meant to address the prevailing widespread shortage of bank notes, but to grow exports, which would improve the liquidity and cash situation.

“The bond note is being created to give the exporters an export voucher as an incentive so that they become competitive, they increase exports. We need to boost our exports so that we earn more dollars because we want, ultimately, to make US dollar reserve currency,” he said.
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