Zimbabwe’s RTGS dollars explained

Zimbabwe Reserve Bank Governor John Mangudya
Spread the love

CAPE TOWN – Zimbabweans queued outside banks in the Zimbabwean capital Harare on Friday as the central bank opened trading of a new currency known as Real Time Gross Transfer dollars or RTGS dollars.

Central Bank Governor John Mangudya said the new currency would trade at around 2.5 to the US dollar.

So what are RTG Dollars? TechZim’s Alvine Chaparadza explains:

RTGS Dollars is money made up of bond notes, bond coins and RTGS balances (electronic money).

What do consumers have right now?

What consumers have in their bank accounts or mobile money wallets or pockets right now is now called RTGS Dollars. But those who opened Foreign Currency Account (FCA), their money is still pure US Dollars.

Are RTGS Dollars a new currency?

That’s the topic of every conversation in Zimbabwe right now. Well, Dr John Mangudya never said or mentioned that the RTGS dollars are Zimbabwe’s new currency. However, the way the RTGS dollars are being treated on the currency market overwhelmingly suggest that RTGS dollars are Zimbabwe’s new currency. So officially RTGS dollars are not Zimbabwe’s new currency but unofficially they are our new currency.

What is the exchange rate between RTGS dollars and US dollars?

The official or formal exchange of RTGS dollars and US dollars (RTGS dollars/US Dollars) is going to begin on Monday the 25th of February. The Reserve Bank of Zimbabwe said the initial exchange rate between the two currencies would be between 3-4 RTGS dollars/US dollar.

Will the rate between the two go up?

The RBZ governor said he expected the rate (3-4 RTGS dollars/US dollar) to go down, however, we’d have to wait and see what the market says.

How will the rate between RTGS dollars and US dollars be determined?

The exchange rate will be determined by the forces of supply and demand on an auction market the RBZ has set up called the Interbank Foreign Currency Exchange Market, which is made up of banks and Bureau de change.

If I want to exchange RTGS and US dollars what do I do and where do I go?

If you want to exchange whatever money you have, you go to a Bureau de change or bank.

Will the black market exist?

The black market will obviously exist because typically it offers better rates than those offered by banks or Bureau de changes.

Does the introduction of RTGS dollars change prices?

According to John Mangudya, nothing should change just because bond notes, bond coins, and RTGS balances are now called RTGS dollars.

Zimbabwe floated its quasi-bond note currency, effectively devaluing the unit in what experts said was in preparation of a local currency through a slow erosion of bloated bank balances that had driven Zimbabwe’s official inflation to above 50 percent.

Mangudya said on Wednesday in a 2019 Monetary Policy Statement that the government had to do away with the 1:1 valuation for bond notes against the US dollar.