Zimbabweans were trading exclusively in US dollars yesterday as the country began switching to the new currency – Zimbabwe Gold (ZiG) – after the Reserve Bank of Zimbabwe (RBZ) unveiled the new gold-backed unit on Friday.
Financial institutions and mobile money platforms began converting customers’ Zimbabwean dollar balances into ZiG late on Friday following the presentation of the Monetary Policy Statement (MPS) by RBI Governor Dr John Mushayavanhu.
Banks have notified customers that their local currency accounts have been converted to ZiG and transactions in Zimbabwean dollars have been suspended until further notice.
As a result, all point-of-sale platforms and mobile money transfers became unavailable yesterday, while retail stores only accepted US dollars and Zimbabwean dollars. According to the Bankers Association of Zimbabwe, the reconstitution of all Zimbabwean dollar accounts is scheduled to be completed by tomorrow in most banks.
The Sunday Mail gathered that commercial banks are expected to start distributing the new ZiG notes and coins as early as this week.
The central bank will begin feeding smaller denomination notes and coins into commercial banks as early as this week for disbursement once the conversion process is complete.
Electronic transactions for some banks are expected to resume by tomorrow, as Zimswitch, the country’s electronic financial transaction settlement platform, finishes modifying its systems to accommodate the new currency.
In an interview with our office in Harare yesterday, Dr Mushayavanhu said ZiG would begin trading on the market this week.
“They (ZiG notes and coins) will be disbursed early this week; “It may not be Monday,” he said.
“It may take a few days, but it will be dispensed this week. This is what we expect. As for the quantities, we will print enough.”
The Fed has not yet set limits on cash withdrawals because “we want to see the public’s reaction before we set the cap.”
Gold-backed zigzags will be issued in denominations ranging from 1 zigzag up to 200 zigzags, as well as half zigzags and quarter zigzags.
While presenting the new currency plan, Dr. Moshayavanhu said that the new currency would be introduced to the market gradually.
“These bonds will be issued gradually in the market to cater to small transactions and to ensure availability of change thus mitigating the use of retail vouchers in the local economy. As such, the proposed denominations will provide convenience to the transacting public.
In Harare, retailers dealt exclusively in US dollars and Zimbabwean dollar notes. Many people, who were surprised by the currency change, became frustrated because they failed to transact in the local currency.
“We did not expect this transformation,” said Mr. Brenna Mandivava, a resident of Buderero.
“Everyone who does not have US dollars is having trouble making transactions. We hope they will solve this soon.”
Retailers have also been busy converting the prices of their goods to ZiG.
“We are adhering to government directives and are in the process of converting prices to the new currency,” Zimbabwe Retailers Association President, Mr. Denford Mutasho, said.
“Retailers are dealing in USD only to ensure that consumers are not inconvenienced with the migration process. We are confident that by Monday most retailers will have migrated to ZiG.
Zimbabwe Bankers Association president Lawrence Nyazima said banks were reconstituted all Zimbabwe dollar accounts.
He said that the process is scheduled to be completed by tomorrow in most banks.
“We expect to start issuing the new banknotes this coming week,” Nyazima said.
“Remember that old Zimbabwean dollar banknotes will return as deposits when they are taken out of circulation. Banks have been fully operational since midnight on Friday (Friday) to reconstitute Zimbabwean dollar accounts and balances to ZiG. Some will keep the same account numbers, while others will have to open new accounts in the currency We expect ZiG accounts to start appearing in different banks this weekend and we are all aiming to be up and running by Monday morning. The Zimswitch will be triggered for the banks as they convert to ZiG accounts.
Zimswitch Marketing Manager, Ms. Sharon Marera, said the platform will come back online once the banks finish reconsolidating the balances.
“It will depend to a large extent on the readiness and composition of the banks,” she said.
“We have already sent notices to customers informing them that the system is down. When the system is restored, the banks will inform the customers. But this will not be uniform as it will depend on the banks.
Economist and member of the Monetary Policy Committee at Reserve Bank Z, Mr Persistence Gwanyanya, said the new currency would be widely available before the end of the week.
He added: “We expect the notes to be traded on Monday.”
“I believe that the performance of the new currency will be better compared to its predecessor because it is backed by physical reserves (gold and cash).”
The introduction of ZiG is part of several policy measures aimed at addressing exchange rate fluctuations, reducing inflation and restoring macroeconomic stability.
The new currency replaces the Zimbabwean dollar, which has depreciated rapidly over the past few months.
The new currency will be backed by the quantity and value of precious metals – especially gold – as well as foreign currency reserves held by the Federal Reserve.
As of Friday last week, the central bank had in its reserves $100 million in foreign currencies and 2.5 tons of gold worth $185 million. Sunday mail
