Former Finance minister Simba Makoni believes the country should not consider using the Chinese Yuan as an alternative currency as proposed by Central Bank governor Gideon Gono, in view of the challenges faced by the US dollar.
Speaking at a post-Budget meeting organised by the Zimbabwe Chamber of Commerce, Makoni said despite China being the second largest economy, the Chinese themselves were not trading in their own currency.
“Of course China has the second largest economy, but they are not trading with the yuan, they use the American dollar. Doesn’t that tell us something?” said Makoni.
“You need to ask yourselves why the Chinese do not trade in their currency. If they are not trading in their own currency how will using their currency help Zimbabwe?”
Gono last weekend said Zimbabwe should look to the Chinese yuan given new pressures on the US dollar emanating from the eurozone debt crisis.
“With the continuous firming of the Chinese yuan, the US dollar is fast ceasing to be the world’s reserve currency and the eurozone debt crisis has made things even worse,” said Gono.
“As a country, we still have the opportunity to avoid being caught napping by adopting the Chinese yuan as part of consolidating the country’s look East policy.”
However, Makoni was adamant saying: “In spite of the full push that we look East, if you look at (Finance minister) Tendai Biti’s statistics about who matters in our economy either as destination for our exports or sources for our imports, Zambia is higher than China so is Mozambique.
“South Africa is the single largest trading partner and Biti calls us South Africa’s supermarket, so why recommend the Chinese currency and not the South African rand?
“The logic is not there for me. Biti’s decision to retain the multi-currency system that mostly uses the American dollar is better than the advice that we switch to the Chinese currency.”
Makoni said the downside of business was the decision to try and please every constituency and this would result in minimal progress.
The country currently uses a cocktail of currencies adopted in 2009 as a way of stabilising the economy and taming runaway inflation.