Zimbabwe Bans Foreign Currencies – country risk plunging to 2008 era

The Zimbabwe government has made yet another catastrophic decision banning the use of foreign currencies (US Dollar, South African Rand, Botswana Pula and all other foreign currencies) from being used as legal tender alongside the Zimbabwean Dollar in any transaction in Zimbabwe with effect from 24 June 2019.

The government decision will not only hurt access to basic commodities in the country but also will hurt Matabeleland communities that are in the border with South Africa and Botswana such as Gwanda, Matobo, Mangwe, Bulilima and Tsholotsho who are using these currencies (Rand and Pula) more than the US Dollar and the Zimbabwean Dollar.

Whilst, some sections of the Zimbabwean society have condemned the charging of goods and services in foreign currency when locals are earning RTGs Bond, it also needs to be considered that the RTGs Bond is weak and grossly affected by hyper inflation. With the RTGs Bond trading at 1:13 to the USD it is MIHR’s fear that the goods and services will continue to be inaccessible to many due to hyper inflation.

MIHR is also concerned that the government’s decision will result in the country quickly plunging to the 2008 era of shortage of basic goods and services, printing of cash, hyper inflation and acute poverty.