The Ministry of Finance and Economic Development is delaying the introduction of the $20 note and other higher denominations to avoid upsetting the market.
Treasury boss Mthuli Ncube said allowing citizens to use foreign currency in domestic transactions as well as delaying the introduction of higher Zimbabwe dollar denominations is meant to manage the growth of money supply. Said Ncube:
At the moment we have allowed citizens to use free funds (forex), as a way to also manage the growth of money supply.
So, we said we will bring it ($20 note) but we need to ease pressure and we want to manage the introduction of whatever currency we have so that again we don’t balloon growth of money supply.
We use the swapping mechanism where we are swapping RTGS balances for cash and we have kept that approach and that’s the right approach to do it.
The Reserve Bank of Zimbabwe (RBZ) introduced the $10 note at the end of May and had initially announced that the $20 note would be in circulation by the first week of June.
The exchange rate has spiralled out of control, with the local dollar now trading at 1:60 and above against the US$1 on the parallel market at a time when the fixed exchange rate remains at 1:25.