1 July 2019

Zimbabwe Takes a Big Gamble in Its Bid to Dump the Greenback

analysis

Zimbabwe last week made its interim currency, the RTGS dollar, the country's sole legal tender, drawing the curtains on a decade of US dollar dominance. Harare was forced to abandon its own dollar in 2009 and adopt the greenback as its de facto medium of exchange in the face of hyperinflation and economic meltdown. Against this backdrop, what could possibly go wrong?

It is probably no coincidence that Zimbabwean President Emmerson Mnangagwa reportedly said last week that his government wanted to sell its ivory and rhino horn stockpiles, with a price tag of $600-million. As his government brushes aside the US dollar for everyday transactions in favour of a curious currency called the RTGS - Real Gross Time Settlement - dollar, it will need as much of the former as it can lay its hands on.

For the past decade, Zimbabwe has shared, with Ecuador and Timor-Leste, the dubious distinction of being a country without its own currency, one forced to use the US dollar. This prevents a central bank from hitting the press button on the printing presses and provides the economy with a currency that people actually have faith in. "In God We Trust" is the motto on...

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