Reserve Bank of Zimbabwe Governor, Dr John Mangudya has demystified the myths surrounding the coming of the Chinese currency, the Yuan and has assured the people of Zimbabwe that no changes will be made as the US dollar remains the country’s settlement currency.
Dr Mangudya was speaking at a meeting co- hosted by the Herald Business and Confederation of Zimbabwe Industries to discuss Zimbabwe’s 2016 economic outlook symposium.
‘We have to two types of currencies, the settlement and trading currency. The United States dollar is the settlement currency while all the other currencies including the South African Rand, the Japanese Yen, Botswana Pula among others are trading currencies.
Late last year Reserve Bank of Zimbabwe and People’s Bank of China finalized the modalities for the use of Yuan in Zimbabwe.
Dr Mangudya cited the trade between the two countries as one of the main reasons for the introduction of the Yuan.
“Trade between Zimbabwe and China is high, most of our tobacco goes to China and we have to have their currency in the system, to make trade easy. This is just a measure to promote the use of the Yuan, nothing more,” said Dr Mangudya.
Governor Mangudya armor-plated the fact that the Yuan is just like all the other trading currencies.
“The Yuan is just like the Rand”, emphasized Dr Mangudya
The RBZ boss added that the use of the Yuan will smoothen international obligations, ease business costs and accelerate transactions with the Oriental state.
He also said that, “Zimbabweans are always in the panic mode and are quick to resist new initiatives even though the initiatives are good.”
The yuan which is also referred to as the renminbi is officially part of Zimbabwe’s multi-currency system, but has not been activated as the market predominantly relies on the US dollar.
The Chinese currency gained significance on the back of major economic deals between the two countries