One of the most respected economists in the country, Professor Ashok Chakravarti has said that the use of the United States dollar was a dead end for Zimbabwe since there are no good relations between the country and the currency producers. Chakravarti said this during a presentation at the Confederation of Zimbabwe Retailers breakfast meeting in Harare today.
The professor said that there is no country that has succeeded in the dollarisation of the economy for a long time without good relations with the suppliers of the currency.
“Dollarisation is a dead end unless the country has a source of the US Dollars,” he said.
The US, which produces the dollar, has put Zimbabwe under sanctions straining the relations between the two countries.
Chakravarti gave an option of adopting of the rand as a currency of circulation in the country. The professor said that the Rand is not on demand like the US dollar which is needed world wide also outsourced by the Chinese and the Nigerians.
“Adopt the Rand as the currency of circulation within the multi-currency system. Rand is a weak currency and not externalisable,” Prof Chakravarti remarked .
According to the Sunday Mail, the Reserve Bank of Zimbabwe governor John Mangudya said that they could not talk about adopting the rand as a major currency as they had already adopted the multi-currency basket introduced in 2009.
Chakravarti also proposed accepting the bond dollar as a local currency in solving the cash crisis in the country.
“Accept that bond dollar is now a local currency and allow it to trade freely with other currencies within the multi-currency basket. Let it market establish exchange rate bond dollar,” Chakravarti said.
The bond note was introduced last year to ease the cash shortages in the country. However, a lot of resistance came out from the people during the introduction of the bond note last year with the memory of the 2008 Zimbabwean dollar inflation still fresh in the people’s minds.
Zimbabwe is still in an economic crisis with the cash crunch increasing in the country. The cash crunch in the country has resulted in the looming of the black market as people trade cash on the streets.