The Reserve Bank of Zimbabwe (RBZ) says it will promote the use of the Zimbabwe dollar, among other foreign currencies, as it is ideal for promoting the growth and competitiveness of the economy.
In the Monetary Policy Statement released on the 7th of February 2022, the RBZ said the use of the local currency has helped the economy to grow by 7.8% in 2021. The central bank said:
The use of the local currency has helped the economy to grow by 7.8% in 2021 following the increased local currency backed aggregate demand that was necessitated by increased agricultural output and expansion in Government infrastructural projects.
The central bank said it was wrong for Zimbabwe to totally abandon its currency in 2009 as the country did not have sufficient foreign exchange liquidity to meet its foreign currency commitments. The bank said:
The past experience of the country is quite instructive that promotion of the use of local currency is beneficial. In 2009 the country legislated a fixed exchange rate under the auspices of dollarisation.
Electronic or virtual currency was commingling with physical foreign currency and the two were at par.
With hindsight, what was supposed to have been done then was to allow the local currency to be part of the basket of currencies as evidence on the ground shows that the country did not have sufficient foreign exchange liquidity to meet its foreign currency commitments even under dollarisation.
Legislation of a fixed exchange rate, as was the case in 2009 when the US$ was introduced as the currency of transaction, is not ideal for any economy as it renders the economy uncompetitive and a supermarket economy and gives the wrong impression that foreign currency is a domestic currency that is earned without exporting.
Foreign currency needs to be earned from foreign sources such as exports and remittances and competitiveness of local production becomes very essential to promote exports, and stability of the local currency is key to promoting investment and for value preservation.
Among other things, the RBZ raised the limit on mobile banking transactions from person to person from ZW$5 000 to ZW$10 000 per transaction and from ZW$35 000 per week to ZW$70 000 per week.
The central bank also resolved to increase the cash withdrawal limit for the banking public from ZW$2 000 to ZW$5 000 per week.