The country has used U.S. dollars and South African rand since 2009, when the old Zimbabwe dollar was rendered worthless by hyperinflation as the economy collapsed.
Zimbabwe made its interim currency the country’s sole legal tender on Monday, ending a decade of dollarization and taking another step towards relaunching the Zimbabwean dollar.
The government banned the use of foreign currencies as legal tender.
“The march towards full currency reform is part of our transitional stabilization program,” Finance Minister Mthuli Ncube said in a video posted on Twitter. “This move is really beginning to restore full monetary policy.”
The central bank also hiked its overnight lending rate to 50 percent from 15 percent as a part of a set of measures to protect the RTGS dollar introduced in February.
The central bank said in a statement that it had put in place letters of credit worth US$330 million to secure imports for important goods such as fuel.
It would also try to boost liquidity on the interbank forex market by removing a cap on margins for banks and making sure that more than 50% of the foreign currency that Zimbabwean companies have to surrender ends up on the interbank market.
Zimbabwe abandoned its own dollar in 2009 after years of hyperinflation destroyed trust in the local unit.
Mnangagwa said this month that Zimbabwe must reintroduce its own currency by the end of the year.
Mnangagwa’s government last month agreed on a staff-monitored program with the International Monetary Fund (IMF).
The IMF has said Zimbabwe should quickly allow the RTGS dollar to float freely, allow exporters to sell dollars at the interbank rate rather than surrender them to the central bank, and raise interest rates to curb inflation.
The RTGS dollar has been hitting new lows on the black market in recent days.
It was trading between 11 and 12 against the U.S. dollar on the unofficial market on Monday versus a level of around 6 on the official interbank market.
Many Zimbabweans complain that goods and services are still priced in other currencies.
While more than 80% of Zimbabweans earn RTGS dollars, goods ranging from bricks to groceries have their prices pegged in U.S. dollars.
Inflation raced to 97.85% in May, eroding salaries and savings and causing Zimbabweans to fear a return to the hyperinflation era a decade ago.