Zimbabwe urged to consider monetary swap with BRICS countries

by Staff Reporter

2012 July 31 13:12:55 | 2139 Views

Ambassador Christopher Mutsvangwa has urged local monetary authorities to consider currency swaps with China and other current economic powerhouses among the BRICS (Brazil, Russia, India, China and South Africa).

The adoption of the multiple-currency system in January 2009 has been accompanied by persistent liquidity challenges, which has had debilitating effects on efforts to steer the economy on a sustainable growth path.

"Why don't we get into a currency swap with the Chinese or include the yuan in our basket of currencies? Around 2006, the Chinese wanted a currency swap with us where the two trading countries would agree to use their different currencies, but there were no takers.

"China has already done a currency swap with Japan and South Korea, and trade among those countries is growing," he said.

He was speaking on the sidelines of a symposium in Harare last week.

Ambassador Mutsvangwa said a currency swap would help in precluding the effects of the present liquidity crunch that is negatively affecting the local business community.

A currency swap is basically a foreign-exchange agreement between two parties to exchange aspects of a loan in one currency for equivalent aspects of an equal in net present value loan in another currency.

"The US wants to re-engage with Zimbabwe regardless of the political status. The officials I met said they are looking for an opportunity to drop sanctions. It's now a mere formality that sanctions will be lifted. We expect progress to be made within the next 12 months," he said.

The development has, however, been met with scepticism from the Affirmative Action Group. AAG chief executive officer Dr Davison Gomo said it was unlikely that the US would execute a fundamental change in its stance towards Zimbabwe unless there was a change in government.

BRICS currency

Source: AllAfrica.com