Yesterday’s Monetary Policy Statement vindicated former Finance Minister, Tendai Biti who last week had disclosed that Zimbabwe was going to introduce a new currency. Indeed, Mr. Biti was right Zimbabwe has essentially introduced a new currency.
The redenomination of bond notes, coins, and RTGS balances to RTGS dollars technically (but not officially) means that Zimbabwe now has a new currency. Despite the Reserve Bank of Zimbabwe shying away from saying the RTGS dollars are a new currency, they are characteristically a new Zimbabwean currency as they are no longer tied to the value of the US Dollars and they can be formally exchanged with other currencies at a market-determined rate.
Therefore, abandoning the 1:1 pegging between RTGS Dollars and US dollars is the act that has proved that RTGS dollars are in themselves a stand-alone currency. The exchange rate between the RTGS dollars and the US Dollar will start at between 3-4 RTGS dollars/$1 US dollar.
When Mr. Biti made his claim, the Reserve Bank of Zimbabwe was quick to dismiss it by saying that Zimbabwe will “continue to use the multicurrency system”. Yes, we are still using the multicurrency system but Zim dollar has now been introduced into the multicurrency system. And apparently, with reference to Mr. Biti’s statements, this new currency (RTGS dollars) is “not backed by any reserves” or structural reforms which are “prerequisite to currency reforms”.
28 comments
I just did hot recharge of $20 to my netone line but to surprise my balance haven’t topped up
You have successfully paid USD20.00 to TECHZIM Online Payment (83688), Txn ID MP190221.0733.O01727. after such a transaction has been said to be done but no airtime have been received any explanation to that
Yes the only man I trust. But others are too scared of him because he will show them up. Am I not correct?
Thanks honourable tendai biti.my MP
Thanks honourable tendai biti.my MP
There is nothing special about Biti’s pre-emptive statements. He was told by a mole in the system who knew what the authorities were doing. A typical court jest. And getting the credit in a GNU as if the MDC were alone in government.
Why didn’t the mole tell you also and he has never claimed he did it alone,but as minister he takes the credit
Information is on internet. The question is how to get it.
The point is clear, Biti said it. How he got to know about is neither here nor there. He is also right that this currency will not stand the heat of the sad reality of our situation authored by those who have no clue of how to run a modern nation state.
RTGS is not backed by any physical USD or physical cash.It was and has been fictitious money for a long time.The currency was introduced way back last year when Mthuli split the FCA accounts and RTGS accounts.As to why people did not see it then well am not suprised because we only believe what the politicians we support say.If Zimbabwe has real economist as they claim to be they would have picked it up then that this is the route that is going to be taken.Eddie Cross picked it up then.
The next stage is Zim dollar introduction.
To those who insist the RTGS is not a currency the reality is tomorrow you are going to go to the shops and buy bread with it,pay school fees etc and when done buy bundles and tweet that it is not a currency.Well it is and its a reality we have to face till next elections.
You would think this stuff is elementary. But it seems rocket science to many, including ‘media’
You are wrong. We saw the introduction of the RTGS fictitious currency but the authorities maintained a 1:1 parity with the USD. We also said the parity was unsustainable. The new window dressing currency changes will not solve our financial crisis. Until the authorities stop lying to themselves our problems are going up be with us for a long time. Magudya must do the honourable thing and resign.
Mazivawani you say i am wrong yet you go on to acknowledge/repeat what i said above that the RTGS was fictitious money.Nowhere above did we say it was going to fix anything am just simply highlighting that this route was unavoidable and that yesterdays announcement was nothing new as it had already happened.Am also simply highlighting that the introduction of the Zim dollar is unavoidable and its coming.We have a chance to change this in 2023 before that we can shout Mangudya must resign reality is “there is no honour amongst thieves”.You should know this already.The fictious part came from the fact they insisted its 1:1 and overspent and sold bonds that were not backed up by real value.
Reality on the ground is RTGS is being used as an acceptable means of exchange that my friend is a currency what we can argue about is its form as it defies the norm.
From the day that we introduced the bond note (or bond coin) we had a Zimdollar. This has not changed.
true . . . sadly some want to over analyse things they know or have alredy known
So the banks are the roadport now???
A currency can be freely traded locally and internationally on currency markets. This is a stock or say… bond… which is traded for USD, like how company stocks were traded for goods back in the american south. It is not a currency.
currency dictionary definition “a system of money in general use in a particular country.” . . . lets not over complicate things.We might not agree with the concept but that does not mean its not a currency.
When you get time do some research on convertable and non convertable currencies
1. Biti tweets that RBZ has PRINTED new notes
2. Biti then tweets, on the morning of the MPS, that no new currency is coming because, in his mind (and the minds of people that take him seriously), he scared them out of doing it (“caught them pants down”)
3. After 1 and 2, a website that wants to be taken seriously STILL casts that headline.
We are a strange place
its sad really the way Zimbos think now adays nothing to do with logic always about who you support
This should be a welcome development. Literally we have been sitting on this bomb for a while and letting it explode is the best we can do. Clearing the slate. If government does the honourable thing and not increase the RTGS money in the system, using the willing buyer willing seller model these fictitious balances will reach an equilibrium with the USD. At that point a forced conversion would be possible at a suitable rate, that is if our monetary authorities intend to redollarise the economy, otherwise they would need to reach equilibrium and at equilibrium start supporting the RTGS dollars with backing of USDs or gold or some form of standard. This would fix the exchange rate, creating a sustainable environment for fiscal and monetary activities. They can either strengthen or weaken the RTGS as they wish upon completion of such an exercise. Joining the Rand Union becomes a possibility. But first they need a good model of how to retire the RTGS balances they will be buying from the market with the seed USDs they are pumping in. That way the RTGS balances will be depleted, hence the rate of RTGS to USD would increase if not remain at equilibrium. Setting the exchange rate would also reduce the internal debt in USD value. Hence they will make it possible for government to retire debt using USD if government has any USDs at a prevailing rate. The only no go is adding more RTGS into the system, reducing is the way to go in my view.
Thank you for speaking sense . . . its difficult to get meaning arguments like this these days as everything has now gone down to who do you support.We need impartial analysis like yours if Zim is ever to move forward
A strong currency is not good for our economy because it makes our goods more expensive and this inturn reduces aggregate demand. A week aggregate demand drives an economy into a recession (-ve growth). It reduces Output and exports.
As we all know, domestic demand for goods priced in $US has fallen during the past few months because the $US is a strong currency.
Now that we are moving into this new monetary system where the RTGS dollar is our currency of reference, and which allows all goods and services to be priced in RTGS dollars instead, we will witness an increase in domestic demand.A strong currency is not good for our economy because it makes our goods more expensive and this inturn reduces aggregate demand. A week aggregate demand drives an economy into a recession (-ve growth). It reduces Output and exports.
As we all know, demand for goods priced in $US has fallen during the past few months because the $US is a strong currency.
Now that we are moving into this new monetary system where the RTGS dollar is our currency of reference, and which allows all goods and services to be priced in RTGS dollars instead, we will witness an increase in aggregate demand. The RTGS dollar is 4 times weaker than the $US, and a weak currency means our goods are cheaper, which will boost aggregate demand. So instead of going into a recession, we can see our economy starting to grow as our goods become competitive and this will increase the level of exports and correct the BOP position. The RTGS dollar is 4 times weaker than the $US, and a weak currency means our goods will be cheaper now, affordable by both the rich abd the poor,local and foreign buyers. So instead of going into a recession, we can see our economy starting to grow.
Funny discussion here.
Dear Folks, the RTGS-$ is Fiat-money, as all the others. It is backed by nothing, the Zimbabwean economy is lousy and the elite corrupted.
So, the predestinated way for that currency is: Quick devaluation – as usual. There is no other way.
The RTGS might be not backed but still with a viable strategy and suitable controls it can actually raise Zimbabwe out of the hole it is. What is needed is not panick but a well thought strategy, channelling forex to the market at the right times to control the exchange and retire the RTGS balances at the right stopping times. That alone will remove the excess RTGS dollars in the exchange. Making sure every bid and sell are matched. That way we will avoid run away inflation and have a stable currency. As I stated above, the RTGS balances will need to be retired on a interval basis. Like weekly retire 100million RTGS dollars. That way no excess will be on the market
Thank you so much guys, this I’d call an insightful conversation. Learnt a lot once again thank you! Wished I could ask all of you how and what actually determines the black market rate in Zimbabwe?
Xe.com global currency exchange platform still shows 1US = 361.900ZWD. Why? For what?