December 7, 2016 / 3:50 PM / 8 months ago

Zimbabwe says bond notes a success, to increase circulation

2 Min Read

HARARE, Dec 7 (Reuters) - Zimbabwe's central bank said on Wednesday it would increase the circulation of its new "bond notes", hailing the new currency's launch a success as it maintained its 1:1 peg to the U.S. dollar.

The Reserve Bank of Zimbabwe (RBZ) last week introduced the bond notes to ease chronic cash shortages, raising fears of uncontrolled money-printing that would cause hyperinflation.

John Mangudya, the RBZ Governor said the bank would release in the first wave an additional $7 million in bond notes, to bring to $17 million the total amount of the new currency in circulation.

Banks have continued to impose stringent limits on cash withdrawals even after the introduction of bond notes.

Some opposition activists had tried but failed to stop the launch of the bond notes, while everyday consumers have raised concerns about the quality of the $2 notes and $1 coins - criticisms the central bank governor shrugged off.

"The rubbing off of ink and the variation of the security thread on the notes are quite normal," said Mangudya, adding that the bank would soon introduce $5 notes.

Zimbabwe is grappling with a devastating drought that has left more than 4 million people facing hunger, while the worst financial crisis in seven years has fuelled some of the biggest anti-government protests in a decade. (Reporting by MacDonald Dzirutwe; editing by Richard Lough)

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