Zimbabwe’s pseudo currency – the RTGS$ dollar – continues to depreciate against the United States dollar, further impelling inflationary pressures in the country.

As at the end of last week, official figures show that the RTGS$ depreciated against the US dollar on the inter-bank foreign exchange market as the midrate closed the week 4.57% higher at RTGS $6.0010.

Bids and offers ended the week at 5.8596 and 6.1424, respectively.

The average spread widened from RTGS $0.2678 to RTGS $0.2828.

The currency volatility has pushed Zimbabwe’s latest annual inflation rate to a 10-year high of 97.85% for the month of May, from 75.86% previously, latest figures from the Zimbabwe National Statistical Agency show.

President Emmerson Mnangagwa, in a recent radio interview said the RTGS$ was “the strongest currency in the region” and would be allowed to “depreciate further” because it was having a negative impact on the country’s exports.

A currency timeline

Zimbabwe adopted a multicurrency system in early 2009, which was largely underpinned by the United States dollar, and listed firms adopted the US dollar as their book keeping currency.

But there have been significant monetary shifts in the period between then and now.

These include the introduction of export incentives in the form of bond notes in October 2016 through Statutory Instrument 133 which amended section 44 of Reserve Bank of Zimbabwe Act (the bond notes eventually became a surrogate currency); separation of RTGS (real time gross settlement) bank accounts and US dollar Nostro accounts last year, and very recently the announcement of the Monetary Policy Statement which saw the floating foreign currency trading through the introduction of an inter-bank foreign exchange market.

And just this February, the RBZ’s Monetary Policy announced the creation of the interbank foreign exchange market and the introduction of the RTGS dollar (a combination of the bond notes and electronic bank balances) as the functional currency in Zimbabwe.