“This is a measure that removes most of the distortions that were impacting the market,” The permanent secretary in the Finance Ministry said.
Zimbabwe's central bank began Friday trading a sharply discounted replacement currency in an effort to ease a cash crisis that has crippled the economy and plunged millions of people deeper into poverty.
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On Wednesday, Zimbabwe's central bank announced that it would scrap the peg between its quasi-currency bond note and the United States dollar, creating a new currency from the bond notes and notional electronic dollars that will become known as RTGS dollars.
Queues formed outside banks in the Zimbabwe’s capital, Harare, as the central bank opened trading of the new currency, a witness told Reuters.
Bond notes and electronic dollars, which have been locked away in individuals' accounts for months due to a lack of cash notes, are anticipated to be merged into a separate currency called RTGS dollars, according to the central bank.
The move more or less reintroduces a national currency as Zimbabwe’s government fights to restore a sense of normalcy to the country’s economy.
“This is a measure that removes most of the distortions that were impacting the market,” The permanent secretary in the Finance Ministry George Guvamatanga said.
However, opposition party leader Tendai Biti called it insanity and said that “they have, through the back door, reintroduced the Zimbabwe dollar.”
Zimbabwe has been under a cascade of strikes, protests, and demonstrations for months over poor salaries for doctors and others, as well as rising fuel prices that reached a 150 percent hike in January. Reports of sexual abuse, police brutality and torture have surfaced in the ensuing government crackdown.
In 2009 the southern African country, grappling with hyperinflation, did away with its own currency and switched over to the U.S. dollar. Seven years later, the central bank printed bond notes attached to the dollar, theoretically, to fund government spending.
However, shortages of fuel and banknotes have rendered Zimbabwe’s economy hard-hit. As fewer than 10 percent of the country’s populace formally employed, consumers have been facing increased economic misery.