A clash of ideas has risen between the Reserve Bank of Zimbabwe Governor John Mangudya and the well-known economist Professor Ashok Chakravarti on the adoption of the South African Rand as the former states that the move will erode the economic gains in the country.
Mangudya said that the adoption of the Rand as the official currency for Zimbabwe is not necessary as it will lead to speculative tendencies, fuel inflation or price hikes and hinder export viability.
“It does not make any sense and we are always against such a move because it will not help anyone,” said Dr Mangudya on ZBC TV.
Chakravarti had earlier on given an option of using the Rand as a currency of circulation stating that the use of the United States Dollar was a dead end since there were bad relations with the producing nation.
The economist’s argument on the use of the Rand is that the South African currency is not on demand as much as the US Dollar. The US dollar is being outsourced by the Nigerians and the Chinese as there have been reports of money laundering from the citizens of the two populous countries.
“Adopt the Rand as the currency of circulation within the multi-currency system. Rand is a weak currency and not externalisable,” Prof Chakravarti remarked.
Chakravarti has always argued the use of the Rand as a possible solution to the Zimbabwe’s cash crises as he said that he once gave such an advice to the former Finance Minister Tendai Biti.
The RBZ is set to print $300 million more bond notes on top of the $200 million to ease the liquidity crunch. The move has however raised fears as some economists say this may lead to inflation.