HARARE – The Reserve Bank of Zimbabwe Deputy Governor, Dr Khupikile Mlambo has said that the “psychology of the dollar (US$)” is hindering the move by the government to abandon the use of multi-currencies and establishment of the Zimbabwean dollar as the sole legal tender.
The multi-currency system which was in place since 2009 was scrapped with effect from the 24th June, 2019 in a desperate bid to stabilise inflation and exchange rate.
Despite these efforts, most businesses have continued to price their goods and services in US dollars while prices in ZW$ have remained a direct conversion of the US$ depending on the rate of the day largely anchored on the parallel market rate.
Resultantly, the economy is battling price distortions stemming from the multi-tire pricing model which is most expensive in RTGS or electronic payment systems.
In an interview with the Zimbabwe Broadcasting Corporation (ZBC) Online on Tuesday, Dr Mlambo quizzed over the timeliness of the move, said that looking at all the countries that have dollarised it has been extremely difficult to exit dollarisation successfully.
“It takes time for people to escape that psychology of the dollar because it is the most convenient currency in the world,” Dr Mlambo said.
“So, clearly it will take us time to exit that psychology of the dollar but having said that, it is important to understand that as we implement policies that strengthen the demand for the ZW$, we can begin to distance people away from thinking in US dollars.”
Dr Mlambo said there is need for cooperation from all stakeholders to delink from the US$ obsession so as to bring about stability in the economy.
It was expected that the scrapping of the multi-currency regime should boost the value of the local currency subject to high demand for the purposes of transactions, however the ZWL$ continue to lose value reaching a high of 1:22 against the US$ in the previous week.
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Raynold Mhotseka is a Journalism and Media Studies student at the University of Zimbabwe. He serves as a news writer at financial research firm, Equity Axis where he is currently on attachment. He can be contacted through the following email links, email@example.com and firstname.lastname@example.org.