Zim scraps plan to convert dollar earnings to rands, euros

Harare - Zimbabwe’s central bank abandoned a plan to convert half of its export earnings into rands and euros as it explores ways to ease a shortage of dollars.

In a statement on Tuesday, the institution said it will now require 50% of export earnings to be transferred to a Reserve Bank of Zimbabwe account. The central bank will then immediately credit the same amount, plus a 5% “export incentive”, into an authorised bank account for the exporting company.

Zimbabwe, which abandoned its own currency in 2009 because of hyper-inflation, trades mainly in US dollars, while the rand, euro, Botswana pula, yen, yuan and Indian rupee are also legal tender. The move comes as demand for cash has led to shortages in an economy struggling to attract investment as it recovers from a decade-long decline.

It marks a reversal from last week, when the central bank said it would try to ease demand for dollars by converting 40% of foreign-exchange receipts from exports to rands and 10% to euros, among other measures.

Exporters being paid in currencies other than the dollar will be able to deposit all of their earnings directly into their bank accounts, without placing half in a central bank-controlled account, the bank said on Tuesday. The 5% incentive bonus applies to all earnings from any currency, it said.