Zimbabwe Prohibits Use Of US Dollars And Other Foreign Currencies

Before you head out to Asia, Europe or the Caribbean this summer, make sure you know how to exchange your dollars or pounds to the local currency of the place you will be visiting. The most convenient places where you can exchange your money include airports, hotels, train stations and tourist spots but they are the most expensive. Your best option is Knightsbridge FX that has better exchange rates than banks.

In order to defend its fledgling currency against speculations in the black market, Zimbabwe’s Finance Minister Mthuli Ncube prohibited the use of US dollars and other foreign currencies in local transactions. In 2009, the US dollar and other foreign currencies were allowed in Zimbabwe to be used as legal tender after inflation devastated the value of Zimbabwe’s dollar.

An interim currency, the Real Time Gross Settlement dollar (RTGS) or zollar was introduced to end dollarization. However, the RTGS has struggled since it was introduced in February. Black market speculation caused the value of the zollar to slide sharply against the US dollar.

Government decree has placed the value of RTGS at par with Zimbabwe dollar. The government has also mandated that the RTGS will be the country’s sole legal tender for local transactions. The US dollar, British pound, South African rand, Botswana pula and other foreign currencies are no longer considered legal tender for transactions in Zimbabwe.

According to Eddie Cross, an economist and founding member of the Movement for Democratic Change, the major opposition party in Zimbabwe, he does not believe that the measure will halt the decline of RTGS. The exchange rate will run and is completely out of sync. The measure is like an economic sabotage that is catastrophic to the people. Businesses that have debts that are denominated in foreign currency could expect an increase on the costs of servicing the debts.

Travelers are advised to check the exchange rate at the local bank and then compare it with the free no-obligation exchange rate quote from Knightsbridge FX to determine how much can be saved. Exchange rates can be better than banks because banks have complex infrastructures and charge hidden fees to cover their costs.

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