Log in
Forgot password ?
Become a member for free
Sign up
Sign up
Dynamic quotes 

MarketScreener Homepage  >  News  >  Economy & Forex  >  All News

News : Economy & Forex
Latest NewsCompaniesMarketsEconomy & ForexCommoditiesInterest RatesBusiness LeadersFinance ProfessionalsCalendarSectors 
All NewsEconomyCurrencies / ForexCryptocurrenciesEconomic EventsPress releases

Zimbabwe plans new currency as dollar shortage bites - finance minister

share with twitter share with LinkedIn share with facebook
share via e-mail
01/12/2019 | 03:08pm EDT
A man holds up for a picture a one hundred trillion Zimbabwean dollars note inside a shop in Harare

HARARE (Reuters) - Zimbabwe will introduce a new currency in the next 12 months, the finance minister said, as a shortage of U.S. dollars has plunged the financial system into disarray and forced businesses to close.

In the past two months, the southern African nation has suffered acute shortages of imported goods, including fuel whose price was increased by 150 percent on Saturday.

Zimbabwe abandoned its own currency in 2009 after it was wrecked by hyperinflation and adopted the greenback and other currencies, such as sterling and the South African rand.

But there is not enough hard currency in the country to back up the $10 billion of electronic funds trapped in local bank accounts, prompting demands from businesses and civil servants for cash which can be deposited and used to make payments.

Finance Minister Mthuli Ncube told a townhall meeting on Friday a new local currency would be introduced in less than 12 months.

"On the issue of raising enough foreign currency to introduce the new currency, we are on our way already, give us months, not years," he said.

Zimbabwe's foreign reserves now provide less than two weeks cover for imports, central bank data show. The government has previously said it would only consider launching a new currency if it had at least six months of reserves.

Locals are haunted by memories of the Zimbabwean dollar, which became worthless as inflation spiralled to reach 500 billion percent in 2008, the highest rate in the world for a country not at war, wiping out pensions and savings.

A surrogate bond note currency introduced in 2016 to stem dollar shortages has also collapsed in value.

President Emmerson Mnangagwa is under pressure to revive the economy but dollar shortages are undermining efforts to win back foreign investors sidelined under his predecessor Robert Mugabe.

Mnangagwa told reporters on Saturday that the price of petrol had increased to $3.31 per litre from $1.32 from midnight but there would be no increase for foreign embassies and tourists paying in cash U.S. dollars.

Locals can pay via local debit cards, mobile phone payments and a surrogate bond note currency.

With less than $400 million in actual cash in Zimbabwe according to central bank figures, fuel shortages have worsened and companies are struggling to import raw materials and equipment, forcing them to buy greenback notes on the black market at a premium of up to 370 percent.

The Confederation of Zimbabwe Industries has warned some of its members could stop operating at the end of the month due to the dollar crunch.

Cooking oil and soap maker Olivine Industries said on Saturday it had suspended production and put workers on indefinite leave because it owed foreign suppliers $11 million.

A local associate of global brewing giant Anheuser-Busch Inbev said this week it would invest more than $120 million of dividends and fees trapped in Zimbabwe into the central bank's savings bonds.

(Reporting by MacDonald Dzirutwe; Editing by Kirsten Donovan and Edmund Blair)

By MacDonald Dzirutwe

Stocks mentioned in the article
ChangeLast1st jan.
ANHEUSER-BUSCH INBEV -1.14% 77.34 Delayed Quote.34.04%
VALUE8 -0.37% 5.44 Delayed Quote.14.77%
share with twitter share with LinkedIn share with facebook
share via e-mail
Latest news "Economy & Forex"
12:49aTrump says India's tariff hike unacceptable, demands withdrawal
12:47aDollar edges up vs yen as some pre-G20 summit jitters ease
12:46aChina's industrial profits rise 1.1% in May as sales quicken
12:42aSingapore can't rule out off-cycle monetary easing - central bank
12:39aSOUTHEAST ASIA STOCKS : Most rise as tentative trade truce report boosts sentiment
12:24aBOJ's deputy chief warns of heightening economic risks as trade war bites
12:16aNEWS HIGHLIGHTS : Top Financial Services News of the Day
12:13aU.S., China agree tentative trade truce ahead of G20 summit - SCMP
06/26LAND INFORMATION NEW ZEALAND : An Australian company has received permission to buy 87 hectares of farm land at Matamata to give its horses a freer rein. The land is being converted from a dairy farm to a thoroughbred horse breeding, racing and sales operation.
06/26U.S. apartment vacancy rate flat at 4.7% in second quarter - Reis
Latest news "Economy & Forex"