Zimbabwe plans to de-dollarize by 2025; Four countries in the world with triple digit inflation Zimbabwe is one of them

According to the country's largest independent asset manager, the US dollar will remain dominant even after the government's December 2025 deadline.

According to Imara Asset Management, which manages assets over $100 million, Zimbabwe's economy is becoming more dollarized.

A government measure taken in July to limit the availability of the local currency has accelerated this trend.

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Zimbabwe's national statistics agency reports that 80% of all economic transactions are conducted in US dollars, an increase from 75% earlier this year.

According to the company's chief executive officer and chief investment officer, John Legat and Shelton Sibanda, in a quarterly note to clients Thursday, "We are making the bold assumption that the US dollar will remain in place for a long time to come." Economic damage would result from the loss of the US dollar.

In 2009, Zimbabwe abandoned the Zimbabwean dollar due to hyperinflation and adopted the US dollar as its primary currency.

The Zimbabwean dollar was reintroduced in June 2019, outlawing all other legal tenders, including the US dollar.

As a result of the Coronavirus pandemic, this policy was reversed in April 2020. Now, the government plans to allow the use of the US dollar only until December 2025, after which it will eliminate its use.

Due to the uncertain nature of the upcoming currency regime, banks are cautious about lending beyond 2025, leading to higher borrowing costs for businesses and individuals.

Foreign exchange rate volatility caused lenders to incur losses when loans denominated in US dollars were repaid in local currencies.

According to Mthuli Ncube, the government is considering the next steps for its currency policy. "We will not jeopardize the growth we have achieved so far," he said.

It has been strongly advocated by Zimbabwe's President Emmerson Mnangagwa that the Zimbabwe dollar be reintroduced as the exclusive currency.

In addition, Imara Asset Management expressed skepticism regarding "ZiG," a new gold-backed digital currency to stop re-dollarization.

This report said there is no proof that the ZiG is backed by gold or can be converted into gold, and that it is largely a central bank project.

There are four countries in the world with triple-digit inflation

Zimbabwe: 324.5%

Venezuela: 360%

Sudan:   256.2%

Argentina 121.7%