In a tweet on X Hopewell Chin’ono said there is very little confidence in the new currency. Newsreportzim.com extract Chin’ono’s post below
So today was my first time in my local supermarket, Bon Marche at Chisipite, since the introduction of Zimbabwe’s new currency, the ZiG.
Bon Marche is part of the biggest supermarket group in Zimbabwe, OK Zimbabwe.
Everything in Bon Marche is priced in US Dollars making the ZiG a secondary currency.
This is what I have been talking about, there is very little confidence in the new currency.
In a country where there is confidence in a local currency, everybody prices in the local currency and converts to any other currency you might want to pay with from the local currency pricing.
In Britain they take the Euro, but prices are in Pound Sterling.
When the biggest supermarket group in Zimbabwe prices its goods in a foreign currency instead of the local currency, it indicates a lack of confidence in the local currency’s stability or purchasing power.
It means that businesses prefer to conduct transactions in a more stable or widely accepted currency, such as the US dollar in Zimbabwe’s case.
This practice signals economic uncertainty and inflationary pressures in the local economy, Zimbabwe is going through hyperinflation.
It means whatever happens to the ZiG, this retail giant is covered because they are pricing in a stable currency which means they don’t have to be changing prices regularly in response to a weakening local currency.
Now the problem is that those with US Dollars are going to the black market to sell them at a higher premium to citizens who need the US Dollar for fuel or to apply for passports or to pay for their customs duty or pay for an airline ticket.
When the local currency loses buying power at the black market as it has done moving from 13.56 to 20 inside ten days, it becomes cheaper to buy products in supermarkets for those with US Dollars because they change them for 20 and buy products which are priced using the fixed exchange rate of 13.56.
Zimbabwean fuel stations don’t accept the local currency, the Zimbabwean government doesn’t accept its local currency when applying for passports, or paying for customs duty or even buying number plates for your car.
Put simply, the government of Zimbabwe has no confidence in its own local currency, so why should the citizens be expected to trust something that the issuer doesn’t trust?
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