No Plans to Make US Dollar Sole Currency, Zimbabwean Finance Minister Calls Idea ‘Suicidal’

The Zimbabwean Finance Minister, Mthuli Ncube, recently told business leaders that he is not planning to make the U.S. dollar the country’s sole currency again.

Government Focused on Strengthening Local Currency

Instead of entertaining those calling for the dollarization of the Zimbabwean economy, Ncube suggested his ministry is in fact focused on defending the value of the zimdollar. According to a report by the Sunday Mail, the Zimbabwean minister made these comments while speaking at a pre-budget seminar held in Victoria Falls.

Since its reintroduction in 2019 when it was briefly at parity with the USD, the Zimdollar has seen its official exchange rate against the U.S. dollar drop to over ZWL$90 for every one USD. On the parallel market, one U.S dollar is currently equivalent to more than ZWL$160.

As previously reported by Bitcoin.com News, it is this growing difference between the parallel and official market exchange rates that prompted one of Zimbabwe’s biggest business lobbies to sound the alarm.

However, despite the local currency’s continuing slide as well as warnings by businesses, Ncube is quoted by the Sunday Mail arguing against dollarizing the economy again. He explained:

Colleagues we cannot adopt the U.S. dollar alone as the official currency. You were there before and there were queues at banks, huge foreign currency deficits, and you had deflation. That was because of the U.S. dollar. It is not a good idea and it will be suicidal to do so.

Zimdollar as Transactional Currency

On the other hand, the report quotes Ncube pointing to the increased industrial output as one of the achievements attained when the zimdollar was reintroduced. The finance minister also explained to those attending the seminar why the government wants businesses to not reject the zimdollar. He said:

“We are using both currencies and you will see shifts one way or the other. We are trying to stabilize the Zimbabwean dollar and we have done well to ensure salaries are not eroded. The United States dollar is performing the role of a savings and investment currency while Zimbabwean dollar is performing more the role of a transactional currency rather than an investment currency.”

Do you agree with Ncube’s arguments against dollarization? Tell us what you think in the comments section below.