Confidence in rand plummets among Zimbabweans

CONFIDENCE in the South African rand continues to plummet in Bulawayo as businesses are inflating its cross rate against the United States dollar to discourage people from using it.

The official rate at banks and retail outlets is set at an average of R16,5 while fuel stations and commuter omnibus operators have pegged it at $1:R20. The official rate at banks as of yesterday was averaging R16,5 to the greenback.

A snap survey by The Chronicle revealed that businesses are preferring to trade in the US dollar due to the South African currency's volatility.
Commuter operators, fuel service stations and street vendors are using the $1:R20 rate since Monday as the rand continues to tumble. Coins and notes are exchanged at different rates.

Fuel service stations such as Trek, Engen, Puma and Total were also using the $1:R20 rate. "This is meant to discourage consumers from using the rand, no-one wants it nowadays. Even banks are discouraging us from taking it," said a fuel attendant.

"The only way is for one to go and change their money into dollars and come back to transact," said another attendant at a Zuva Petroleum station in the city.

Buying a $1 mobile phone recharge card with coins costs R50, and R20 with rand notes – apparently to discourage customers from using rand coins.

Commuter omnibuses are charging between R10 and R15 for a trip to suburbs in the city, a journey that costs US$0.50.

"We're no longer accepting one rand or two rand coins, they have no value anymore. The rand is no longer predictable, the rate changes everyday so the fares will continue changing," said a kombi driver Thulani Ndebele.

He said commuters travelling to nearby suburbs like Nketa, Mpopoma, and Old Magwegwe were paying R10 while those going as far as Cowdray Park, Pumula South and Emganwini were parting with R15. Some businesses across the city said they were no longer accepting the rand hence their decision to inflate the rate so as to discourage customers from using it.

Most airtime vendors said they no longer accepted the rand as it was no longer stable. "We prefer bond coins, they're the main currency these days, rands we no longer accept," said a vendor who identified herself as MaDube.

Economist Prosper Chitambara said the depreciation of the rand in the past months had resulted in people shunning it.

"Basically the volatility of the rand is discouraging people from taking it as one of the main purposes of money is to store value. When there's volatility, it cannot be effectively saved as a store of value," said Chitambara.

He said as a result, it was affecting the balance of trade between the two countries in favour of South Africa.

"The implication is that exports are more expensive while imports become cheap. The trade balance will be in favour of the South African economy," said Chitambara.

Zimbabwe uses a multi-currency system dominated by the United States dollar and the South African rand.

The rand has been steadily losing value against the United States dollar of late. During the last festive season, one needed 15 rands to exchange for a $1, while in 2014 it cost nine rand to exchange for dollar.

South Africa's Deputy President Cyril Ramaphosa on Monday urged calm, insisting the rand would rebound. "We've been here before. We should never forget that South Africa has been where we're now. There was a time where the rand to the pound was around R24, R26 even, but we did recover. The function of the economies is that they go up and down. Currencies [do that] as well. The key question is what are we [government] doing," said Ramaphosa.