Business / Economy
Bond coins gain popularity as Rand weakens
24 Nov 2015 at 08:30hrs | Views
Some traders have stopped accepting the South African rand in favor of bond coins in Zimbabwe's multi-currency economy as the rand continues losing value against the U.S. dollar, according to a report in the Chronicle.
The Reserve Bank of Zimbabwe began to release Zimbabwean Bond Coins on Dec. 18, 2014, and at first they were unpopular. The public feared they were the government's first step to reintroducing an unreliable Zimbabwean dollar.
The rand's decline has become a problem for businesses, mainly those involved in trade with South Africa, said John Mangudya, governor of the Reserve Bank of Zimbabwe, in a Chronicle interview.
"We're in a multiple-currency system, which provides choice to consumers on what currency to us," Mangudya said. "If businesses feel there are losses attributed to a particular currency, you can't force them to use it."
Mangudya encourages businesses and consumers to exchange their rand for bond coins as a way of retaining value. "Our position is that it's not a crime to manage risks associated with a certain currency … we're providing Easylink platforms across the country where people can exchange their rands to bond coins or dollars," Mangudya said.
Prior to December 2014, Zimbabweans suffered a change crisis that forced many citizens to accept candy or other items as change, The Independent reported.
To fix the problem, the reserve bank introduced bond coins equivalent to U.S. dollars to be distributed through normal banking channels in denominations of 1 cent, 5 cent, 10 cent, 25 cents and 50 cents.
Zimbabwe now has US$20 million worth of bond coins in circulation.
The bond is not officially a currency, blogger Takura Zhangazha said in The Herald. It was introduced to deal with the problem of a lack of loose change for retail businesses. Initially it was unpopular. Fast forward a year later and it is now a most valued "currency."
"I am certain someone at the Reserve Bank and the Ministry of Finance is smiling," Zhangazha said.
One of Zimbabwe's largest supermarket chains, OK, has stopped accepting South African rand coins from customers, joining scores of businesses who are complaining over
the rand's devaluation, the Chronicle reports. South Africa is Zimbabwe's largest trading partner.
The rand's devaluation has made Zimbabwe's exports to South Africa expensive and unattractive, the Chronicle reports. Imports are cheaper.
The Reserve Bank of Zimbabwe began to release Zimbabwean Bond Coins on Dec. 18, 2014, and at first they were unpopular. The public feared they were the government's first step to reintroducing an unreliable Zimbabwean dollar.
The rand's decline has become a problem for businesses, mainly those involved in trade with South Africa, said John Mangudya, governor of the Reserve Bank of Zimbabwe, in a Chronicle interview.
"We're in a multiple-currency system, which provides choice to consumers on what currency to us," Mangudya said. "If businesses feel there are losses attributed to a particular currency, you can't force them to use it."
Mangudya encourages businesses and consumers to exchange their rand for bond coins as a way of retaining value. "Our position is that it's not a crime to manage risks associated with a certain currency … we're providing Easylink platforms across the country where people can exchange their rands to bond coins or dollars," Mangudya said.
Prior to December 2014, Zimbabweans suffered a change crisis that forced many citizens to accept candy or other items as change, The Independent reported.
To fix the problem, the reserve bank introduced bond coins equivalent to U.S. dollars to be distributed through normal banking channels in denominations of 1 cent, 5 cent, 10 cent, 25 cents and 50 cents.
Zimbabwe now has US$20 million worth of bond coins in circulation.
The bond is not officially a currency, blogger Takura Zhangazha said in The Herald. It was introduced to deal with the problem of a lack of loose change for retail businesses. Initially it was unpopular. Fast forward a year later and it is now a most valued "currency."
"I am certain someone at the Reserve Bank and the Ministry of Finance is smiling," Zhangazha said.
One of Zimbabwe's largest supermarket chains, OK, has stopped accepting South African rand coins from customers, joining scores of businesses who are complaining over
the rand's devaluation, the Chronicle reports. South Africa is Zimbabwe's largest trading partner.
The rand's devaluation has made Zimbabwe's exports to South Africa expensive and unattractive, the Chronicle reports. Imports are cheaper.
Source - AFKInsider newsletter
