Zim allows trade in yuan, yen, rupee
30 January 2014, 12:29
Harare - Zimbabwe on Wednesday approved domestic trading in the Chinese yuan, Indian rupee, Japanese yen and Australian dollar, in a move that will effectively make those currencies legal tender.
Acting central bank governor Charity Dhliwayo said exporters and the general public could use and "open accounts denominated" in those currencies.
Zimbabwe was forced to abandon its own currency in 2009 amid chronic hyper-inflation and a deep economic crisis.
The government, led by President Robert Mugabe, chose to adopt the US dollar, halting inflation and bringing some stability to the economy.
The euro, rand, Botswana pula and British pound are already legal currency.
But with the economy under pressure again, the bank appears eager to entice all the investors it can.
Dhliwayo said that 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 $2bn 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 $25m, not $100m as previously planned.
Banks were required to raise the $100 million by June this year but this has been extended to 31 December 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 - $200 million.