Minister of Finance and Economic Development Mthuli Ncube has admitted that the United States Dollar is not equal to the Bond Note or the Real Time Gross Settlement (RTGS) electronic dollars. This is in stark contrast to Reserve Bank of Zimbabwe (RBZ) governor John Mangudya who insisted that the money is at par despite the fact that he ordered banks to separate bank accounts into Nostro Foreign Currency Accounts (FCAs) and RTGS FCAs. In his presentation at the United Kingdom think tank Chatham House on Monday, Ncube said,
The market is setting the pace. What is left for us is choreography and management of the economic fundamentals. The economy has dollarised. RTGS [real time gross settlement] balances are over $6 billion. The market is doing everything, we are going through a transition. The market has said these currencies [US dollar and bond notes] are not at par. I don’t want to argue with the market. The bond notes will, at some point, have to be demonetised and I cannot tell you (when that will be).
Mangudya, on the other hand, has insisted that the RTGS FCA will remain linked to the Nostro FCA and has described any move to let the market determine exchange rates as economic suicide. Said Mangudyya,
…Let me repeat, it would be economic suicide for this economy if the Government of Zimbabwe was to do that (free-float exchange rates). That would mean overnight, people will offload their RTGS balances and purchase the little foreign currency that is on the market…By doing so, it will be inflationary and you are going to ask for higher salaries and at the end of the day, we will have spillover effects.
Govt Will Not Commit Suicide By Allowing Market To Determine Exchange Rate – Mangudya
Govt Should Determine Foreign Exchange Rates And Not The Market: Cross-Border Association