Zimbabwe Adopts Chinese Yuan As Legal Currency

Zimbabwe’s central bank has announced that it would accept the Chinese Yuan and three other Asian currencies as legal tender following improved economic relations in recent years.

“Trade and investment ties between Zimbabwe, China, India, Japan and Australia have grown appreciably,” the acting governor of the Reserve Bank of Zimbabwe, Charity Dhliwayo, said on Wednesday.

Dhliwayo announced that exporters and the public can now open accounts in Yuan, Australian Dollars, Indian Rupees and Japanese Yen.

Zimbabwe abandoned its local currency, the Zimbabwean Dollar in 2009, when it became worthless amid chronic hyper-inflation and a deep economic crisis.

It accepts the US dollar and the South African rand as the main legal tender and the use of these currencies has helped to stabilize the economy after world-record inflation threw it into a sharp decline.

The Euro, Botswana Pula and British Pound are also legal tender in the country.

President Robert Mugabe has sought to boost economic relations with Asia after his relations with the West came under strain over his policy of seizing white-owned farms.

Chinese investors have over the past two decades entered diamond mining, construction and retail sectors in Zimbabwe but with the economy under pressure again, the bank appears eager to entice all the investors it can.

Dhliwayo said the economy was faced with a severe liquidity crunch, which meant that local industry could not obtain credit, as well as high import costs and uncompetitive local products.




    She lamented unfavourable interest rates and bank charges which she blamed for low deposits as an estimated $2 billion is circulating outside the banking system. The low level of deposits has raised fears of a liquidity crisis in the sector.

    The reserve bank chief said that for now, minimum capital requirements for banks would remain at $25 million, not $100 million as previously planned.

    Banks were required to raise the $100 million by June this year but this has been extended to December 31, 2020.

    She added that the central bank would resume its key functions of being the government’s bank and the lender of last resort by end of March this year after efforts to recapitalise the bank with a facility of between $150 and $200 million.

    Join the ICIR WhatsApp channel for in-depth reports on the economy, politics and governance, and investigative reports.

    Support the ICIR

    We invite you to support us to continue the work we do.

    Your support will strengthen journalism in Nigeria and help sustain our democracy.

    If you or someone you know has a lead, tip or personal experience about this report, our WhatsApp line is open and confidential for a conversation

    LEAVE A REPLY

    Please enter your comment!
    Please enter your name here


    Support the ICIR

    We need your support to produce excellent journalism at all times.

    - Advertisement

    Recent