Business / Economy
Bond coins use rises
10 Aug 2015 at 09:43hrs | Views
A MAJORITY of Zimbabweans now prefer using bond coins to avoid exchange losses given the weakening of the South African rand against the United States dollar, according to the Reserve Bank of Zimbabwe. The apex bank introduced 1c, 5c, 10c, 25c bond coins in December last year to buttress usage of the multiple-currency system.
It further introduced a 50c denomination in March this year.
Indexed at par with the US$, the use of bond coins is part of measures to promote and enhance price competitiveness through introduction of small denomination coins to resolve the problem of change.
To date a total value of $10 million bond coins have been procured, the bank said.
Many had expressed scepticism about bond coins at their inception fearing their usage marked a return to the Zimbabwean dollar and the dreaded hyperinflation era.
The government has ruled out the return of the Zimbabwean dollar anytime soon until economic fundamentals permit.
Last week RBZ governor John Mangudya said the use of bond coins had started impacting positively on the economy.
"The Reserve Bank is very grateful to all stakeholders from the retail, transport, informal traders, consumers and business organisations who've made the bond coins initiative a success," said Mangudya.
"Acceptance of the bond coins has also benefited from the progressive weakening of the South African rand, as the transacting public prefer to minimise exchange losses by shifting to the use of bond coins."
The rand has been on a steady retreat in terms of value against the greenback to the current average rate of 1:12,8.
Evidently, the governor added, the introduction of bond coins has resulted in price correction processes that have benefited the transacting public, as small change is now easily available.
Several businesses have since reduced prices for their products following the introduction of bond coins.
A loaf of bread for instance, which was pegged at $1, now costs between $0,70 and $0,90.
Mangudya said the central bank would continue to implore business to further realign their prices for the benefit of the consumers.
The weakening of the rand, however, has a negative effect on export earnings from South Africa, the country's biggest regional trade partner, as companies suffer expensive US$ indexed costs only to sell in low valued rand.
The central bank has also reported a successful implementation of the demonetisation of Zimbabwean dollar exercise meant to resolve the loss of monies by account holders when the country adopted the multi currency system.
The demonetisation process began in earnest on June 15, 2015, following the promulgation of Statutory Instrument 70 of 2015.
The process is scheduled to run up to September 30, 2015.
Mangudya said the RBZ was satisfied with progress made so far. The government has budgeted $20 million for the programme, which is expected to promote consumer and business confidence by providing credibility to the multiple currency system and legally retiring the local unit.
About $4 million has been converted with cash paid to walk in customers reaching $301,000.
It further introduced a 50c denomination in March this year.
Indexed at par with the US$, the use of bond coins is part of measures to promote and enhance price competitiveness through introduction of small denomination coins to resolve the problem of change.
To date a total value of $10 million bond coins have been procured, the bank said.
Many had expressed scepticism about bond coins at their inception fearing their usage marked a return to the Zimbabwean dollar and the dreaded hyperinflation era.
The government has ruled out the return of the Zimbabwean dollar anytime soon until economic fundamentals permit.
Last week RBZ governor John Mangudya said the use of bond coins had started impacting positively on the economy.
"The Reserve Bank is very grateful to all stakeholders from the retail, transport, informal traders, consumers and business organisations who've made the bond coins initiative a success," said Mangudya.
"Acceptance of the bond coins has also benefited from the progressive weakening of the South African rand, as the transacting public prefer to minimise exchange losses by shifting to the use of bond coins."
The rand has been on a steady retreat in terms of value against the greenback to the current average rate of 1:12,8.
Several businesses have since reduced prices for their products following the introduction of bond coins.
A loaf of bread for instance, which was pegged at $1, now costs between $0,70 and $0,90.
Mangudya said the central bank would continue to implore business to further realign their prices for the benefit of the consumers.
The weakening of the rand, however, has a negative effect on export earnings from South Africa, the country's biggest regional trade partner, as companies suffer expensive US$ indexed costs only to sell in low valued rand.
The central bank has also reported a successful implementation of the demonetisation of Zimbabwean dollar exercise meant to resolve the loss of monies by account holders when the country adopted the multi currency system.
The demonetisation process began in earnest on June 15, 2015, following the promulgation of Statutory Instrument 70 of 2015.
The process is scheduled to run up to September 30, 2015.
Mangudya said the RBZ was satisfied with progress made so far. The government has budgeted $20 million for the programme, which is expected to promote consumer and business confidence by providing credibility to the multiple currency system and legally retiring the local unit.
About $4 million has been converted with cash paid to walk in customers reaching $301,000.
Source - chronicle
