Informal traders and public transport operators are rejecting the ZWL$50 note, as the Zimbabwe dollar continues to depreciate against the United States dollar.
According to NewsDay, over the past few years, inflation has driven the ZWL$2, ZWL$5 ZWL$10, and ZWL$20 notes out of circulation.
The smaller denominations have now been joined by the ZWL$50 note in the dustbin as informal traders and transport operators find it burdensome to move around with huge bundles of “worthless” banknotes.
The first thing is that this is a response from the market showing a lack of confidence in the Zimbabwe dollar and on the economic policies of the government.
The ramifications of that would be the continuous decline of the value of the Zimbabwean dollar versus major currencies.
That will drive up the prices of goods that are denominated in Zimbabwe dollars.
So, in other words, it will drive up and put inflationary pressures on the Zimbabwe dollar-denominated prices.
Economist Prosper Chitambara said the rejection of the ZWL$50 note might push the government to release higher denomination notes.
He said higher denomination notes will inadvertently increase the money supply. Said Chitambara:
Given the challenges we have had, with high inflation I think it’s understandable that most economic agencies would reject the ZWL$50 note because it has obviously been decimated by inflation and it cannot purchase much.
So, it then calls on the monetary authorities to come up with higher denominations.
I am sure they would be wary to do that because that would also increase money supply depending on how it is done which can then trigger inflation.
But, given the challenges as I have said with high inflation, there is a need to provide some bit of convenience, in economic urgency, to the transacting public by coming up with notes that are in line with the inflationary developments.
Meanwhile, in Chitungwiza, citizens who were in possession of the ZWL$50 banknotes were “dumping” them at large retail outlets such as OK and Pick n Pay at Makoni Shopping Centre where they were still being accepted.