HARARE: Zimbabwe deputy prime minister Emmerson Mnangagwa called on Chinese vice president Li Yuanchao and expressed the hope that the Chinese yuan can serve as the legal currency of his African country.
An official speaking on condition of anonymity told China Business News that Zimbabwe has long maintained good relations with China. In fact, during an Asia-Africa summit in Jakarta, Indonesia in April, Chinese president Xi Jinping held a separate meeting with Zimbabwean president Robert Mugabe.
Due to multiple revolutions, government regulation changes, andd social upheavals in the Southern African country, it experienced serious inflation beginning in 2009 and lasting nine years. By 2009, the Zimbabwean dollar lost its function as a circulation currency. Currently, four fifths of cash transactions are conducted in US dollars. Goods in supermarkets are also priced in US dollars.
Inflation reached its peak in 2008, when the official inflation rate in July that year was as high as 2,200,000%, setting a world record. The Zimbabwean government then calculated tax revenues and government charges in US dollars and cancelled the Zimbabwean dollar.
Zimbabwe announced a multiple currency circulation system in early 2009, allowing the circulation of the US dollar, the South African rand and the Botswana pula, in a bid to control consumer prices and recover the nation’s economy.
The nation’s inflation rate dropped to 3.7% in 2010, and analysts attributed this to the implementation of the multiple currency system.
Zimbabwe announced in January 2014 that it wanted to add the Chinese yuan, the euro, the Japanese yen and the Indonesian rupiah into its multiple currency system.
Currently, Zimbabwe is still in discussion with related countries on currency circulation, including China, which is why Mnangagwa touched on using the Chinese yuan as the nation’s legal currency.
He is hoping that the yuan could become one of the openly circulated currencies in a bid to speed up the negotiation process. A Chinese business leader in Zimbabwe told China Business News that the country is mainly using the US dollar as settlement currency.
The so-called circulation of the yuan does not mean using it for cash transactions but rather depositing US dollars into yuan accounts for yuan settlement.
