FOREX Africa: Zimbabwe’s Currency Protest Turns Violent

FOREX Africa: Zimbabwe’s Currency Protest Turns Violent

Anti-government protesters in Zimbabwe demonstrating against plans by the country’s central bank to re-introduce local banknotes were on Wednesday forcibly dispersed by police in the capital, Harare.

Dozens of protesters marched to the Reserve Bank of Zimbabwe (RBZ) to demand that the financial markets regulator reversed its plans to introduce ‘bond notes’ that will be linked to the U.S. dollar in October to curb rampant shortage of cash, Africa Review reported.

Police used tear gas and water cannons to disperse the currency protesters before they could reach the central bank’s headquarter.

In May, RBZ announced that it will start printing its own version of U.S. dollars noted to ease a serious cash shortage in the country.

The bond notes, which will have will the same value as their US dollar equivalents of $10 and $20, will be backed by $200 million support from the African Export-Import Bank, the country’s central bank governor John Mangudya said.

The protesters however fear that the move to print new money, as it happened eight years ago when inflation skyrocketed to over 500%, could wipe out people’s savings and pensions.

Zimbabwe, which was once referred as the “breadbasket of Africa” due to the abundance of food its mostly white farmers exported to other nations, started using foreign currencies like the U.S. dollar and the South African rand in 2009, after the local currency was ruined by hyperinflation.

The country’s economic crisis hit a bottom in 2008, when Zimbabweans had to carry bagful of banknotes to the shop to buy basic commodities like bread and milk, while prices doubled at least twice a day.

There are at least eight foreign currencies that are used as legal tender in the country including the Australian dollar, British pound sterling, Botswana pula, the Euro, Indian rupee, Chinese yuan and Japanese yen.

Protests organized by opposition parties and social media movements have become common in Zimbabwe in recent weeks as citizens express their discontent with President Robert Mugabe’s failure to rescue the economy from further collapse, Africa News reported.

Mugabe has threatened to shut down social media in the country and described social media activists as ‘cyber terrorists. He has also accused countries such as the U.S. for using social media to fun Arab-Spring like protests in Zimbabwe.