FILE PHOTO: People walk past the Reserve Bank of Zimbabwe building in Harare

INTERNATIONAL – Zimbabwe’s central bank said on Wednesday oil firms, chrome miners, embassies and international organisations could conduct local transactions in foreign currencies, as the country battles an acute dollar crunch and soaring inflation.

Last month, Zimbabwe banned the use of foreign currencies in domestic transactions after it made its RTGS currency the sole legal tender, ending a decade of dollarisation.

The central bank is hoping to unlock $1.3 billion held in banks by exporting companies, individuals and international organisations who are reluctant to sell their money on the official interbank market.

In a circular to banks seen by Reuters, the Reserve Bank of Zimbabwe said those earning foreign currency could buy fuel in dollars and that chrome mining firms could buy chromium from small scale producers in foreign currency.

The exemption of foreign currency earners, just a month after the government ended dollarisation, could be seen as yet another sign of the authorities’ flip flopping when it comes to policy, which has spooked investors in the past.

Last month’s abrupt ban on domestic use of foreign currencies caught the market by surprise as only a week before, President Emmerson Mnangagwa and the finance minister had repeated a pledge to only introduce a local currency at the end of this year.

Reuters