Economic analyst Brains Muchemwa has urged the Reserve Bank of Zimbabwe (RBZ) to consider printing larger currency denominations in the wake of price instabilities which have eroded the value of the rejected 25 cents and 50 cents coins by the informal market.
Zimbabwe has endured years of cash shortages, a situation that is breeding the parallel market where physical cash is sold at a premium of up to 50 per cent.
With Zimbabwe’s highest currency note being ZWL$5, informal traders as well as commuter operators have begun rejecting the coins due to loss of value.
Muchemwa said relying on the $5 notes, which is the highest denomination on the market, is no longer viable.
”The government has to bring in higher valued or higher denominations with a reasonable value.
“The $5 note does not make sense anymore in this economy when you look at the level of inflation and the average costs of goods and services,” he said.
Trade Economist, Dr Gift Mugano noted that the small amounts in circulation are likely to trigger a hike in premiums on mobile money transfers as there is already a shortage of money in circulation.
“The amount of coins in circulation is more ZWL$100 million so it means there is a shortage of that amount since it’s no longer accepted. We now have serious cash shortages and this is likely to hike premiums on mobile and other transfers,” he said.
The bond coins were introduced in 2014 as a way to ease small change problems but were fully adopted in 2017 when the country officially started using the bond notes and in 2018, the USD was totally scrapped as the government opted for the use of a mono-local currency.