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Market rejects ZWL$50 notes

by Staff reporter
03 Oct 2023 at 06:23hrs | Views
Several informal traders and public transport operators are now refusing to accept the ZWL$50 note as Zimbabwe's local currency continues to depreciate against the US dollar.

The ZWL$2, ZWL$5, ZWL$10, and ZWL$20 notes have already been phased out of circulation due to the rapid depreciation of the local currency against the US dollar. Since the August 23-24, 2023 elections, the local currency has lost over 18% of its value, resulting in a current exchange rate of US$1 to ZWL$5,466.74.

As a result, informal traders and transport operators are reluctant to use smaller denomination notes, as it would require them to carry large bundles of cash for even minor transactions.

A survey conducted by NewsDay Business in Chitungwiza, a town on the outskirts of Harare, confirmed that the ZWL$50 note is now being rejected by transport operators. Commuters have reported difficulties in using the ZWL$50 note for transactions, with some operators citing concerns about disposing of the notes.

Effie Ncube, the president of the National Consumers Rights Association, stated that the rejection of lower denomination notes reflects a lack of confidence in the local currency and the government's economic policies. He believes that this trend will lead to further devaluation of the Zimbabwean dollar, resulting in higher prices for goods denominated in the local currency.

Economist Prosper Chitambara suggested that the rejection of the ZWL$50 note may prompt the government to introduce higher denomination notes, which could increase the money supply. However, he noted that this move could also lead to inflation, as it would expand the money in circulation.

Monetary authorities in Zimbabwe have been cautious about introducing higher denomination notes due to concerns about rising money supply, which has been a major factor in the depreciation of the Zimbabwean dollar. Nonetheless, Chitambara argued that given the challenges of high inflation, there is a need to provide convenience to the public by introducing notes that better align with inflationary developments.

Source - newsday