RESERVE Bank governor Gideon Gono has warned that Zimbabwe’s nascent economic recovery is at the mercy of the United States dollar, which is facing new pressures from the Euro-zone debt crisis.
Gono says Zimbabwe should in fact be looking to the Chinese yuan as its main currency, while urgently seeking to restore its own currency which was abandoned in 2009 after a dramatic loss of its value.
Speaking in Gweru last Saturday, Gono said: “The extraordinary happenings in Europe where economic power houses in the Euro-zone have been hit by a debt crisis deserves extraordinary measures, especially here in Zimbabwe where we have adopted the U dollar as the major currency in our multi-currency regime.
"With the continuous firming of the Chinese yuan, the US dollar is fast ceasing to be the world's reserve currency and the Euro-Zone debt crisis has made things even worse.
“As a country, we still have the opportunity to avoid being caught napping by adopting the Chinese yuan as part of consolidating the country's look East policy.”
China is now Zimbabwe’s biggest trading partner, with the Asian giant absorbing most of the country’s mineral and agricultural produce.
Vice President Joice Mujuru first raised the possibility of adopting the yuan in September last year, saying it would be a “logical step” and could help solve some of the country’s liquidity constraints.
The multiple currency regime announced in January 2009 has been fraught with difficulties. Retailers are supposed to accept the Euro and the British pound but those two currencies have never caught on, with most transactions being conducted in United States dollars, the South African rand and the Botswana pula.
Finance Minister Biti presented his 2012 budget last week and expects the multiple currency regime to remain in place at least until the end of 2012 when ministers hope it would be replaced by a single currency for the Southern Africa Development Community (SADC).
Gono, speaking at theConfederation of Zimbabwe Industries' (CZI) end-of-year business dinner, said the use of foreign currency was ultimately unsustainable in the long run.
“As long as we continue to use other people's currencies, where we do not have control over that currency, we are not going anywhere as a nation,” he said.
“At the moment the US dollar is going down the tube owing to the Euro-zone debt crisis and as a country, we are also going down the tube because we do not have control of that currency.
"The year 2012 should thus see Zimbabwe coming up with its own currency which we should be using without ruling out the multicurrency system until the economy stabilises.”
The demise of the Zimbabwe dollar is attributed in no small measure to Gono’s policy of printing money, but he insists that his actions were in response to an unprecedented economic crisis which called for “extraordinary measures”.