As Zimbabwe geared up for the battle against the novel coronavirus, it has re-introduced the use of foreign currency for domestic transactions in what was seen as a bid to tap into private forex savings.
The governor of the central bank, John Mangudya said this move is part of “measures to mitigate the devastating impact of COVID-19 on the Zimbabwean society and the economy”.
Zimbabwe outlawed the use of foreign currency as legal tender in June 2019 after having used a basket of currencies when hyperinflation forced the government to ditch the Zimbabwe dollar in 2009.
The US dollar became the main currency for payment of goods and services, but a shortage of greenbacks forced the government to introduced a quasi currency called the bond note which was supposed to be equal to the US dollar in 2016.
In February last Zimbabwe launched currency reforms including reintroducing the local currency and banned the use of the US dollar in a bid to solve a monetary crisis.
The use of the Zimbabwe dollar as the sole legal tender led to a spike of inflation that stands at 540 per cent now.
As said by the government,it was making it easier for the transacting public to conduct business during this difficult period by making available an option to use free funds to pay for goods and services chargeable in local currency.
However labour economist Godfrey Kanyenze says Thursday”s move was inevitable and the government has used the coronavirus pandemic as an excuse to try to stabilise the economy.
While the statement suggests the legalisation of the use of foreign currency was not permanent, Kanyenze said he believed the measure would stay in place for a long time.
