South African rand now the new Zimbabwean dollar

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South African President Kgalema Motlanthe has said troubled Zimbabwe could adopt the South African rand as its standard currency.”We have to help them so that the coalition government works,” Motlanthe said in an interview with the SABC channel, referring to power-sharing between President Robert Mugabe and prime minister-designate Morgan Tsvangirai.

“It may be practical for them to enter into an arrangement with the reserve bank here and allow the rand to become the common currency.” Continued Motlanthe who is also currently serving as president of the Southern African Development Community, which is mediating the crisis.

Analysts say inflation in Zimbabwe stands at several billion per cent.
Presenting the 2009 budget, Zimbabwe’s acting finance minister Patrick Chinamasa, allowed the use of multiple currencies. The rand is one of the currencies in use alongside the United States dollar, Botswana pula. British pound and the euro.

The Reserve Bank of Zimbabwe last Monday relaxed foreign currency trade regulations and allowed most sectors of the economy, including parastatals and local authorities to charge for their services in foreign currency. As a measure to deal with the current food crisis, the government has also released a list of basic commodities that can be imported duty free for six months ending 30 June.

The country is currently facing strikes by teachers and parastatal works who are demanding salaries in hard currency. The Global Fund and several non-governmental organisations have since facilitated the payment of foreign currency allowances to health workers.

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