Business / Markets

Zimbabwe adds China's yuan to currency basket

By Xu Lingui and Tafara Mugwara (China Daily) Updated: 2014-03-04 07:58

Of the four new currencies, people have responded more to the Chinese yuan than the others probably since "made in China" products flourish in the Zimbabwean market.

Some banks - such as Botswana-based BancABC and Stanbic, a division of Standard Bank headquartered in South Africa - already have launched yuan services, while British multinational banks Standard Chartered Bank Ltd and Barclays Plc said they hadn't officially received a directive from the central bank.

Economist and University of Zimbabwe lecturer Edgar Muhoyi said that with the recent move, China will transact more easily with Zimbabwe than before.

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Trade between China and Zimbabwe has grown by more than $1 billion annually over the past two years. And since 2009, China has been Zimbabwe's biggest source of foreign investment. Chinese investments cover a range of sectors, from mining and manufacturing to agriculture and social services.

"Now, with the Look East policy, we are much more involved in transactions with China compared with the rest of the world. The yuan may even beat the US dollar in the market, "Muhoyi said.

He said the preferred currency is sure to be the most stable one but that it also will depend on the transactions being made.

A seller of electronic gadgets, who identified himself as Popula, said he welcomed the central bank's move since he buys most of his goods from China.

"I think that the addition of the Chinese yuan in the basket will make transactions easier than before since we no longer need to convert the money first," he said.

But some foreign exchange dealers and retailers were caught off guard by the central bank's move, and they voiced concerns that with added currencies, transactions will become increasingly tedious and time-consuming.

There were no signs yet of Chinese notes flooding into the market. In shops, people still seemed to be getting their change in rands, credit notes, phone top-up cards, candy and Popsicles.

Zimbabwe adds China's yuan to currency basket "We are already having trouble exchanging the US dollar and the rand in shops," said Gladys Ruziviso, a saleswoman at a chain store in Harare. "Now we have Chinese and Indian money. It means we have to make calculations every time we serve a customer.

"Customers don't like to make conversions and will not be happy to receive change in currencies other than the rand," she added.

Russel Mutyambizi, a foreign currency dealer, said he feared that people might be fooled by counterfeit notes, as most Zimbabweans, including money traders, are not familiar with the new currencies.

"How many Zimbabweans can differentiate a fake yuan from an original one?" he asked.

Xinhua News Agency