Confidence in rand plummets

rands

Auxilia Katongomara, Chronicle Reporter
CONFIDENCE in the South African rand continues to plummet in Bulawayo as businesses are inflating its cross rate against the United States dollar to discourage people from using it.

The official rate at banks and retail outlets is set at an average of R16,5 while fuel stations and commuter omnibus operators have pegged it at $1:R20. The official rate at banks as of yesterday was averaging R16,5 to the greenback.

A snap survey by The Chronicle revealed that businesses are preferring to trade in the US dollar due to the South African currency’s volatility.
Commuter operators, fuel service stations and street vendors are using the $1:R20 rate since Monday as the rand continues to tumble. Coins and notes are exchanged at different rates.

Fuel service stations such as Trek, Engen, Puma and Total were also using the $1:R20 rate. “This is meant to discourage consumers from using the rand, no-one wants it nowadays. Even banks are discouraging us from taking it,” said a fuel attendant.

“The only way is for one to go and change their money into dollars and come back to transact,” said another attendant at a Zuva Petroleum station in the city.

Buying a $1 mobile phone recharge card with coins costs R50, and R20 with rand notes – apparently to discourage customers from using rand coins.

Commuter omnibuses are charging between R10 and R15 for a trip to suburbs in the city, a journey that costs US$0.50.

“We’re no longer accepting one rand or two rand coins, they have no value anymore. The rand is no longer predictable, the rate changes everyday so the fares will continue changing,” said a kombi driver Thulani Ndebele.

He said commuters travelling to nearby suburbs like Nketa, Mpopoma, and Old Magwegwe were paying R10 while those going as far as Cowdray Park, Pumula South and Emganwini were parting with R15. Some businesses across the city said they were no longer accepting the rand hence their decision to inflate the rate so as to discourage customers from using it.

Most airtime vendors said they no longer accepted the rand as it was no longer stable. “We prefer bond coins, they’re the main currency these days, rands we no longer accept,” said a vendor who identified herself as MaDube.

Economist Prosper Chitambara said the depreciation of the rand in the past months had resulted in people shunning it.

“Basically the volatility of the rand is discouraging people from taking it as one of the main purposes of money is to store value. When there’s volatility, it cannot be effectively saved as a store of value,” said Chitambara.

He said as a result, it was affecting the balance of trade between the two countries in favour of South Africa.

“The implication is that exports are more expensive while imports become cheap. The trade balance will be in favour of the South African economy,” said Chitambara.

Zimbabwe uses a multi-currency system dominated by the United States dollar and the South African rand.

The rand has been steadily losing value against the United States dollar of late. During the last festive season, one needed 15 rands to exchange for a $1, while in 2014 it cost nine rand to exchange for dollar.

South Africa’s Deputy President Cyril Ramaphosa on Monday urged calm, insisting the rand would rebound. “We’ve been here before. We should never forget that South Africa has been where we’re now. There was a time where the rand to the pound was around R24, R26 even, but we did recover. The function of the economies is that they go up and down. Currencies [do that] as well. The key question is what are we [government] doing,” said Ramaphosa.

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  • Suppoter

    shame on you mr editor where is my comment, Mugabe loves Britain its a fact. Using its currency then turn around and say sanctions fuseki

  • Jotham

    Your knowledge of economics is very poor maybe you went to a night school. The rand is falling against the international currencies and there is no way we try and defend it. South Africa can protect its citizens by subsiding the losses. As for Zimbos there is nothing that we can do. The fall of the rand has much to do with its international trading patterns. South might subsidize the losses but very soon the effect will be felt by the South Africans.

    • Zololo

      What losses are u talking about wena sithutha the rand is buying better in south Africa that your us d is buying in Zim. Thats why Eunice was making simple comparisons mfene kkk

    • Lunga

      You just a donkey with its brain in its backside!

  • Sabs

    Having said what you feel about the rand against the dollar i strongly believe zimbabweans dont know that the dollar will still buy less compared to the rand. For instance R1000.00 is worth 77 litres of petrol, whereas the R1000.00 after conversion gives $58.80 which translates to only 42 litres. Worse still you petrol is not quality. So guys wake and smell the coffee.

    • Zololo

      They won’t ikakhulu amadomkop afana noJotham

  • Sabs

    This however happens in Zim where people dont understand the meaning of exchange rates

    • Quadro

      Sabs some of us write journals for International organizations and you say we dont understand.Zimbabwe is one of the most educated nations in Africa.We understand more than you understand what you just wrote.In my MBA class I had 20 economist who walked us through modules that had economics in it.Thier level of knowledge amazed us and certainly your assertion in this shallow generalized statement of your which obviously lacks research about Zim there is nothing fancy about exchange rates its just values!That is why Osiphatheleni are thriving in it its straight forward like making fat-cooks!

  • Quadro

    That is what we said in early 2000 and our denial about these signs led us to this mess ,please as advice from people that experienced it and studied and researched about it .You better start moving your investment held in Rand’s to a stable currency or otherwise you will remain with less value and all your interest earned will be eroded like wild fire during summer.

    • Zololo

      Pls do not compare Zim policies of the stone age era to policies practised by a civilised economy. There is bad things that we did as a country to warrant us the state of affairs in our country, whereas anc policy is divergent to what led us to our mess. Read the Docs deduction then u can get enlighted as why we went the way we did and never recovered.

  • Imtoogoodtobetrue

    Awwww.That’s gayyyy.Just kidding.Nice to read something as human as this.

  • Imtoogoodtobetrue

    Bollocks.You didn’t say anything.Geezus! What a puss.

  • Quadro

    What a precise observation,this is very true

  • Quadro

    You are mistaken check Zuze’s response above bro.At times its not about that we cant contain but there are forces that stop us from doing so.You must understand that the Economic environment is made up of many factors STEPLE and if any of this becomes to powerful in the negative sense even if the rest of the other factors will not help in containing the situation.I tell you ours is POLITICAL and there is nothing that intellectuals can do,and as Zuze about SA put it to quote him “As long as they don’t send troops to a foreign country to fight its war
    and pay ANC Cadres ridiculous amounts of money and if they continue to
    hold free elections and not insult trading partners their currency will
    be relevant in their country and sooner or later they will get some good
    people who will arrest the rot. If however they follow the lead of a
    certain neighbor they will also be using the US dollar.”
    The Zim situation was caused by what Zuze just mentioned and its not about that we are not Educated!

  • Sabs

    Lets lick our old wounds now…… Now the dollar plummets