IN a bid to discourage parallel market trade, the Reserve Bank of Zimbabwe (RBZ) has flooded the market with $1 000 notes and $5 000 bearer cheques instead of the higher $20 000 and $10 0
The $1 000 and $5 000 bearer cheques can be accessed via automated teller machines and in banking halls.
Officials said the decision to dish out the lower notes was also taken to contain money supply growth (M3) which has increased from 219,4% in November last year to 222,6% in December.
The increase was against a backdrop of deceleration in M3 growth for most of last year from a peak of 490,9% recorded in January.
Over the past two months, the market has been experiencing daily average shortages of $920,7 billion.
The sources said government and the RBZ were worried about dealings in foreign currency on the black market. They also said the RBZ wanted people to use other forms of money like cheques and making payments using ATM swipe cards.
“There is a major problem of parallel market dealings which forced the bank to release huge quantities of $1 000 notes on the market. This should greatly reduce foreign currency dealings as people would now carry huge bags which are a security threat,” the source said.
“There were also concerns from the government about liquidity on the money market.”
The source however ruled out the possibility of the country running out of paper to print bearer cheques which are found in $20 000, $10 000 and $5 000 denominations.
The paper used to print the $1 000 note is imported from Germany.
The RBZ has also imposed limits of $20 million on cash withdrawals per person from any bank.
Before the client accesses his/her money the bank needs authorisation from the Reserve Bank.
A $1 000 note cannot buy a slice of bread.
The central bank did not respond to questions sent to them last week.
In May, the central bank devalued the Zimbabwe dollar by adjusting the diaspora exchange rate at the foreign currency auction from US$1: $6 200 to $9 000 – a massive 45% devaluation.
The adjustment was targeted at containing the rampant parallel market and giving exporters incentives to stimulate foreign exchange generation.
Despite the adjustment, the measure has failed to close the yawning gap between the official and parallel market rates.
The local currency has crashed to US$1:$25 000 on the black market while the South African rand is trading at around R1:$3 200 compared to the official rate of R1:$1 000.