Zimbabwe to Make Chinese Yuan its Legal Currency After Beijing Cancelled $40 Million Debt

Zimbabwe has announced that it will make the Chinese yuan its official legal tender after Beijing confirmed it would cancel $40 million in debts.

President Xi Jinping visited Zimbabwe President Robert Mugabe

 

Zimbabwe plans to make the Chinese yuan legal tender in a deal that will result in $S40 million ($55 million) of debt being cancelled.

 The southern African nation abandoned its own dollar in 2009 after hyperinflation which peaked at around 500 billion% rendered it unusable. It then started using a slew of foreign currencies, including the US dollar and the South African rand.

 The yuan was later added, but its use had not been approved yet for public transactions in the market dominated by the US dollar.

 The country's Finance Minister Patrick Chinamasa said the use of the yuan "will be a function of trade between China and Zimbabwe and acceptability with customers in Zimbabwe.

They (China) said they are cancelling our debts that are maturing this year and we are in the process of finalising the debt instruments and calculating the debts."

 Zimbabwe's central bank chief, John Mangudya was in negotiations with the People's Bank of China "to see whether we can enhance its usage here", the Minister said.

 China is Zimbabwe's biggest trading partner following Zimbabwe's isolation by its former Western trading partners over Harare's human rights record.

 In reaction veteran President, Robert Mugabe adopted a "look East policy", forging new alliances with eastern Asian countries and buttressing existing ones.

 In early December, Chinese President Xi Jinping stopped over in Zimbabwe in a rare trip by a world leader to the country, and presided over the signing of various agreements, mainly to upgrade and rebuild Zimbabwe's infrastructure such as power stations.

 

Source: AFP

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