Zimbabwe’s central bank began trading a sharply discounted replacement currency on Friday, attempting to ease a cash crunch that has hobbled the economy and plunged millions deep into poverty.
Zimbabwe adopted the dollar in 2009 but, as a chronic hard currency shortage worsened, introduced a parallel system of bond notes that it pegged at 1:1 to the U.S. currency.
Effectively reintroducing a national currency, the Reserve Bank of Zimbabwe (RBZ) said on Wednesday it would carry out a “managed float” of the surrogate, which fetches far less than a dollar on the black market.
The bond notes and electronic dollars, locked in individuals’ accounts for months due to a lack of cash, will be merged into a separate currency called RTGS – or real-time gross settlement – dollars, the central bank said.
It sold U.S. dollars to banks at 2.5 RTGS dollars on Friday morning, Bank Governor John Mangudya told business leaders.
Commercial banks reopened on Friday after a bank holiday, but with exchange facilities from bond notes to U.S. dollars at the same 2.5 rate limited to individual and corporate holders of foreign currency accounts, queues outside appeared to be no longer than usual.
Other members of the public should, in theory, be able to go to banks on Monday and buy U.S. dollars with bond notes or electronic dollars.
But it is not clear how many U.S. dollars the central bank, which only has enough foreign exchange for two weeks of imports, has sold to banks.
The bond notes and notional electronic funds have plummeted on Zimbabwe’s black market in recent months to around 4 per dollar.
Many foreign traders have stopped accepting bond notes as legal tender, leaving businesses such as millers, brewers and miners hamstrung.
Economists cautiously welcomed the central bank’s decision to allow its currency to devalue.
The RBZ hopes its new measures will temper demand for dollars on the black market and ease inflation as the new currency settles at fair value.