Zimbabwe on Monday added a new “surrogate” currency to the nine already in its multi-currency basket amid mixed feelings from the banking public.
The bond notes, which according to the Reserved Bank of Zimbabwe (RBZ) will trade at par with the U.S. dollar, were released in denominations of 2 and 5 dollars, while a 1 dollar bond coin was also introduced to complement the set of bond coins which are already in circulation.
The other currencies in the country’s multi-currency basket are the U.S. dollar, British pound, Euro, Australian dollar, Chinese yuan, Indian rupee, Japanese yen, South African rand and Botswana pula.
RBZ introduced the bond notes following a liquidity crunch caused by the flight of the predominantly used U.S. dollar as some people allegedly externalized it, while others simply came into the country to gain easier access to it.
Some people who have been spending a lot of time in bank queues, often being turned away after the banks fail to dispense any cash, have welcomed the bond notes saying that they will now be able to pay for some goods and services which require cash.
“As long as it buys in the supermarket I will accept it,” said a customer who was waiting for the bank to start dispensing the new notes in Harare’s Avondale suburb.
However, another customer described the day as a “black Monday”, saying that the specter of 2008 when inflation officially hit more than 231 million percent was returning to haunt the country.
Independent bodies put the rate of inflation at more than 4 billion percent then.
Some businesses quickly embraced the new note, with an attendant at a petrol filling station in the Msasa industrial area confirming that they were accepting it.
However, some supermarkets which had initially accepted the notes but later stopped, saying that they needed the RBZ to inform them about the security features first.
Economic analyst Clemence Machadu said the retailers were only trying to be sure of the features before exposing themselves to the new notes.
“It is understandable for some supermarkets not to accept bond notes today or for the next few days, despite assurances by Retailers Association of Zimbabwe to accept them. They are only getting to know the security features today and getting accustomed to them,” Machadu said on his Facebook page.
Initially, RBZ had said the notes would be injected into the market via a 5 percent incentive to exporters, but U.S. dollar shortages have pushed it to introduce them directly to ordinary depositors.
The notes are backed by a 200 million dollar facility from the Africa Export-Import Bank with about 75 million dollars in bond notes expected to be in circulation by the end of 2016.
It is also feared that the new notes will trigger parallel dealings on the black market after some cash hoarders began to sell their money to desperate cash seekers at around 10 percent of the required amounts