Real Time Gross Settlement dollar/Currency

The Real Time Gross Settlement dollar/Currency

The Real Time Gross Settlement dollar is the official currency of Zimbabwe and The Real Time Gross Settlement (RTGS) dollar or RTG (Zimdollar or zollar) was the only official currency in Zimbabwe from June 2019 to March 2020, after which foreign currency was allowed again.

When the RTGS Dollar was introduced in February 2019, Zimbabweans used a mix of foreign currencies including the US dollar, the South African rand, and the Chinese yuan. In June 2019 the use of foreign currencies in local transactions was prohibited as part of the prospective plan for a new national currency. However, inflation and other factors created a dearth of actual bills, and the US dollar was again authorized for local use in March 2020. The government has said that the authorization to use US dollars in local transactions is just temporary, but by June 2020, some Zimbabwean civil service personnel were already demanding payment of their salaries in US dollars, due to hyperinflation in the Zimdollar.

Real Time Gross Settlement dollar History

The RTGS dollar was introduced on 21 February 2019 as part of the February 2019 Monetary Policy that was enacted by the Governor of the Reserve Bank of Zimbabwe, John Mangudya. The currency was made up of bond coins, bond notes and RTGS balances. The original bond notes were introduced in 2016 to ease US Dollar cash shortages at the time. They were renamed RTGS dollars in 2019, and in June 2019 became the only legal currency in Zimbabwe, replacing the multi-currency system. Check Currency converter for more update xe.com

The Real Time Gross Settlement dollar inflation

On 29 October 2019, when inflation on the RTGS dollar had reached over 300%, the central bank announced a "new" currency to be introduced in mid-November 2019. The "new" currency initially traded alongside the RTGS dollar, and was similarly valued, although it did not have the same backing as the RTGS dollar. Basically the "new" currency "Zimdollars" was still the same bond notes.

When inflation did not abate, and with the black market continuing to drive the exchange rates for foreign currencies, the Reserve Bank of Zimbabwe introduced weekly auctions of foreign currencies at the end of June 2020. This, combined with other prudent fiscal and monetary actions by the government, such as eliminating budget deficits, stabilized the Zimdollar.

The Real Time Gross Settlement dollar Value

Officially the rate of the RTGS$ to the US$ was originally set at 1 US$ equaled 2.50 RTGS$ (1 RTGS$ = 0.40 US$), but this was not the case on the open markets where the value fluctuated in the first half of 2019 between US$1 = 7 RTGS$ and US$1 = 13 RTGS$. By March 2020, an attempt was made to peg the so-called Zimdollar at US$1 = 25 RTGS$, but inflation continued and this effort was abandoned.

Annual inflation in the period ending July 2020 was 837.53% as reported by ZIMSTAT.

The exchange rate is determined by the forces of supply and demand on an auction market the Reserve Bank of Zimbabwe set up along with the announcement of the RTGS dollar. The market is called Interbank Foreign Currency Exchange Market and is made up of banks and Bureau de change.

A new weekly auction of foreign currency was set up in late June 2020 by the Reserve Bank of Zimbabwe to attempt to curb the rampant inflation which had driven the Zimdollar down to US$1 = 80 Zimdollars.

Real Time Gross Settlement dollar/Zimbabwean bond notes

Zimbabwean bond notes are a form of banknote in circulation in Zimbabwe. Released by the Reserve Bank of Zimbabwe, the notes were stated to not be a currency in itself but rather legal tender near money pegged equally against the U.S. dollar. In 2014, prior to the release of bond notes, a series of bond coins entered circulation.

Real Time Gross Settlement dollar Zimbabwean bond coins

The Reserve Bank of Zimbabwe began to release Zimbabwean bond coins on 18 December 2014. The coins are supported by a US$50 million facility extended to the Reserve Bank of Zimbabwe by Afreximbank (the African Export–Import Bank). To date coins worth US$15 million have been struck out of the total $50 million available. The coins were first issued in denominations of 1, 5, 10, and 25 cents and are pegged to the corresponding values in U.S. dollars. A 50 cents bond coin was released in March 2015

The coins are being issued to remedy a lack of small change resulting from the absence of a solid seigniorage contract with the U.S., South Africa or any of several other countries whose currencies, including the U.S. dollar and the euro, are being used in the multi-currency system that arose in 2009, when Zimbabwe abandoned the Zimbabwean dollar in response to several cycles of hyperinflation. The Zimbabwean economy being too frail and small to pay the interest which would come with a seigniorage contract, the country chose instead to implement a multi-currency environment based on the U.S. dollar. However, this arrangement has meant a shortage of small change in coins.