Latest News Editor's Choice

Opinion / Columnist

RBZ's interbank forex policy failed miserably in 2008

21 Feb 2019 at 11:49hrs | Views
Just in case folks out there start jumping up and down ululating and eulogising  at the  forex trading liberalisation policy  announced by the RBZ,  a cursory look at the country's recent monetary history shows that this very policy failed miserably in May 2008 leading to the complete and  contemptuous demonitisation of the dreaded Zim$ whose value depreciated to absolute zero.  

Against the backdrop of the foregoing, the question which arises is: why did that forexliberalisation policy fail so dismally? The answer is that it failed so miserably simply because (as usual) the RBZ does not want to solve the real problem savaging the Zim economy. The problem of the Zim economy has nothing to do with production or productivity. The problem has everything to do with the country's monetary policy. The RBZ does not want to restore  credibility and trust to the money that is being used by consumers, buyers and sellers.  Lenin once said that the best  way to destroy a country's economy is to debauch that country's currency. The Zim currency was long debauched by the RBZ.  Right now the new policy of marinating a rotten chicken (bond note) and offering it as a new cuisine (RTGS) is a classic example of the RBZ's complete disdain for solving the currency crisis in Zimbabwe.  Money works on the basis of trust and confidence accorded to it by the markets (consumers, buyers and sellers).

 As I stated yesterday in another article on this subject,  the RTGS dollars are just the electronic version of the now discredited and disgraced bond notes.  

On the policy of interbank forex transactions on a willing seller/willing buyer basis, one needs to revist the abracadabra voodoo economics of the RBZ's infamous chopping off of 12 zeros off the Zim$ hopping (against hope) that it would appreciate in value. A brave act but which proved to be an exercise in futility.

By way of an example, way back in the good old days of  Gono's quintillion percent hyperinflation (even after chopping off 12 zeros from the currency), the Herald reported that (see attachment below)

Source - Colls Ndlovu
All articles and letters published on Bulawayo24 have been independently written by members of Bulawayo24's community. The views of users published on Bulawayo24 are therefore their own and do not necessarily represent the views of Bulawayo24. Bulawayo24 editors also reserve the right to edit or delete any and all comments received.