South African Rand Depreciation Wreaks Havoc on Zimbabwe Markets
Although on the official market the Rand trades 16.7 against the us dollar on Zimbabwe’s streets the currency is being exchanged R20 to US$1.
WASHINGTON DC — The further weakening of the South African rand has almost rendered it useless in Zimbabwe where it is part of a multiple of currencies adopted to stem the historic plunge of the Zimbabwe dollar in 2009. The rand has become volatile and has been easily subjected to external pressures like export commodities and U.S interest rate hikes, depreciating on a free fall almost daily. Although on the official market the rand trades 16.7 against the United States dollar on Zimbabwe’s streets the currency is being exchanged 20 to US$1. The rand lost 26 percent of its value in the six months after turmoil gripped Chinese markets in June last year. This was when the People’s Bank of China executed a 2 percent devaluation of the Yuan and changing the way it traded its currency. Independent economist Rejoice Ngwenya told VOA Studio 7 the fall of the rand has resulted in the frequent use of bond coins, a currency only recognized in Zimbabwe. He said retailers started to reject the rand as early as October last year when its value depreciated, raising fears among the people about its impact on purchasing goods in South Africa. Zimbabweans buy a lot of commodities for various purposes including consumption and trade. He added that bond coins, which are being used in place of rand coins, have not completely taken over the use of the South African currency. "What the bond coins have solved is the crisis of change that had obtained in the rand currency. I don't see the bond coin transforming into a bond note," he said. Ngwenya said it is correct to say that the bond coins are Zimbabwean dollars in disguise.