New currency will not bring any respite to Zim – economist

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By Leopold Munhende

ZIMBABWE’s new currency announced by Reserve Bank of Zimbabwe (RBZ) Governor John Mangudya will lose value faster than government can print its notes, US based economist and currency expert Professor Steve Hanke has said.

The envisaged currency, which has caused some confusion among locals, is expected within two weeks, according to Mangudya.

This is despite Finance Minister Mthuli Ncube maintaining it is just a “cash injection” of new notes to ease a crippling cash crisis in the country.

Hanke, who shared a graph on how the physical local dollar will fare on the market, said its value will plummet faster than government will be printing it.

“Zimbabwe recently announced the issuance of new currency notes in an attempt to address liquidity problems.

“With annual inflation at 574% per year today, Zimbabwe’s currency will become worthless faster than the government can print them,” said Hanke on his Twitter.

Hanke’s inflation rate projection indicates a 17% decrease from 591% early October.

Following Ncube’s decision to bar the publication of inflation figures, Hanke, an expert on troubled economies, has come up with his own estimations on Zimbabwe’s inflation rate.

Speaking to journalists during Tuesday’s post cabinet media briefing, Ncube said the notes will be injected in a manner that would ensure they did not lose value in the current hyperinflationary period.

Said Ncube: “We have noticed that if you buy goods in cash, the prices are substantially lower. It is only because there is a premium on cash. Legally, we have a currency and all it is, is a cash injection.”

Mangudya’s pronouncement of the new notes follow government’s vehement denial of such a possibility barely a fortnight ago.

Ncube, whose austerity policy has resulted in heightened poverty and loss of value in wages, floated the local bond and local electronic cash early this year resulting in heavy devaluation of the domestic currency.

The local unit is now rated US$1:RTGS$20 on the electronic parallel market.