Zimbabwe claims that joining rand union is 'dangerous'

RESERVE Bank of Zimbabwe (RBZ) governor Dr John Mangudya has warned that joining the Rand Monetary Union at the moment could worsen the economic situation as the country does not meet the recommended conditions for its adoption.

There have been increased calls by bankers, industry and commerce for Zimbabwe to adopt the rand as its main currency instead of the United States dollar.

In view of the firming US$ against regional currencies and the associated effect on production costs, worsening cash shortages and depletion of nostro reserves, the RBZ has been cornered to adopt the rand as the official currency to reduce concentration risk associated with the strong dollar.

Zimbabwe has been using the US dollar as its main medium of exchange since 2009 alongside other currencies in the multiple-currency system.

Of late surveys indicate the US dollar now accounts for 95 percent of all transactions in the country following the weakening of the rand whose circulation has diminished to about five percent, according to RBZ.

Responding to the issue in an interview yesterday, Dr Mangudya said the fundamentals associated with the adoption of the rand as a formal currency were not right.