Motlanthe: Zim may adopt rand

[cory85]

Johannesburg - South African President Kgalema Motlanthe said on Sunday that neighbouring Zimbabwe, crippled by a record rise in inflation, could adopt the South African rand as its standard currency.

"We have to help them so that the coalition government works," Motlanthe said in an interview with the SABC channel, referring to power-sharing between President Robert Mugabe and prime minister-designate Morgan Tsvangirai.

It "may be practical for them to enter into an arrangment with the reserve bank here and allow the rand to become the common currency," he added, without fleshing out his suggestion.

Motlanthe also currently serves as president of the Southern African Development Community, which is mediating the crisis.

Prices in Zimbabwe rose by 231 million percent in July - the last time official inflation figures were made public. However, anaylsts say inflation in Zimbabwe actually stands at several billion percent.

The national currency, the Zimbabwean dollar, has been repeatedly devalued and restrictions on the use of foreign currencies including the US dollar, the euro and the rand have been lifted by Harare.

Zimbabwe is also struggling to fend off a deepening humanitarian crisis amid a cholera epidemic blamed on collapsed infrastructure and a desperate need of food aid, according to international agencies.

Motlanthe also urged the international community to help the new power-sharing government, due to be installed this week, after the African Union called for sanctions against Robert Mugabe and his aides to be lifted.

- Sapa-AFP
http://www.fin24.com/articles/default/display_article.aspx?Nav=ns&ArticleID=1518-25_2466444

 

[Pitbull]

Not 100% correct.

If ZIM addopts the Rand it means there is a greater demand for our currency = Higher value. But it can all go very wrong if not handled correctly.

 

[DigitalSoldier]

"We have to help them so that the coalition government works," Motlanthe said in an interview with the SABC channel, referring to power-sharing between President Robert Mugabe and prime minister-designate Morgan Tsvangirai.

http://mybroadband.co.za/vb/showthread.php?t=157375

South African taxpayers' gift of R300-million to Zimbabwe was a waste of money and some of it is being misused for the benefit of President Robert Mugabe's cronies in Zanu-PF.

 

[saffakanera]

And what the moer makes you think that it would be handled correctly? Id rather give a bottle of nitro glycerine to micheal J fox than give money to Zanu-PF.

 

[Pitbull]

And what the moer makes you think that it would be handled correctly? Id rather give a bottle of nitro glycerine to micheal J fox than give money to Zanu-PF.

If Tito and Trevor play this right ALL South Africans can reap great benefits from this. Think along the lines of R 6.00 = $1 but yes, the odds of this going down in such a way that it benefits us is very unlikely.

 

[Flanders]

Call me a pessimist but why do I see this being the biggest !#$@ UP ever?

 

[NameOfBeast]

Call me a realist but why do I see this being the biggest !#$@ UP ever?

There, I've corrected your error.

 

[TheHiveMind]

fk that.. Do they want to destroy the country? Everyone with money, would just convert to another currency

 

[Sherbang]

It's not going to happen, but, if it did, it may be a good thing in that Zimbabwe (ie Mugabe) would lose control of all monetary policy after adopting the Rand. While he would still hold political control he would no longer have any economic control.

 

[DJ...]

The two governments become wholly intertwined in that case. Actions in Zim would affect the rand - they might as well just incorporate Zim into SA if this is the case. You can't just state that another country can use your currency and expect them not to impact it in any way. Zim's hyper-inflation issue wasn't borne out of external, unavoidable circumstances - they were created by Mad Bob. Treat the symptom and not the cause, and you are left with the hyper-inflation issue still. More than just that, SA carries the financial burden of Zimbabwe, because of the economic issues it would create should Zim start dragging the rand down, which is completely expected.

God, that's just the start of it though. What a fscking absurd contemplation. Do these twits not consult with more than one brain-cell before spewing bullschit out of their mouths. And to those who believe that additional demand for the rand by Zimbabwe will result in a strengthening of the rand, which school of economic thought are you coming from? How does incorporating a struggling economy with no foreign trade agreements into our own make any financially viable sense? It would just dilute the currency. Now if there was actual foreign trade taking place in Zim, it might be a different story, but unfortunately BAT's interests in Zim hardly make a dent in the trade books if this were to take place. In order to strengthen the currency, we'd have to actually facilitate international trade of the currency, not incorporate the world's weakest economy into it. Fsck me, what a batty idea...

 

[DJ...]

While he would still hold political control he would no longer have any economic control.

You appear to be under the false illusion that fiscal policy and politics are somehow separate. Not the case, in fact it's quite the opposite. Even if monetary policy was removed from his control, all political actions affect the economy and therefore directly affect the currency. Fiscal and political policy cannot be separated. More so, a country without control of it's financial policies therefore does not have control of the country.

Proof of this is the fact that it wasn't poor monetary policy that put Zim in this crisis, it was piss poor politics that did so, which resulted in adverse financial positions they found themselves in, which were then poorly handled, and it snowballed...

 

[Sherbang]

More so, a country without control of it's financial policies therefore does not have control of the country.

Even better! Fact is that the Rand is already accepted in Zim anyway...

Of course fiscal policy and politics are interrelated, but they are separate as well. A country can be a dictatorship with no human rights at all and still have strong economic policies. Printing thousand dollar notes as Zimbabwe did speeds up inflation exponentially. Some would say that stabilizing their economy is a prerequisite to any recovery. I don't think it would have much impact on South Africa if it were to happen (which it won't)

 

[Slooth]

$RecipeForSucces = $Anc+$ZANU-PF

 

[Albereth]

So this election is about swapping one idiot for another - brilliant!

 

[DJ...]

I don't think it would have much impact on South Africa if it were to happen (which it won't)

I've stated my case based on an economic opinion. How will absorbing a failing, hyper-inflationary economy into ours not have any detrimental affects in your opinion? How does one isolate those issues to Zimbabwe only, without affecting the rand, if they are using the rand as their currency? How is it beneficial to South Africa and South Africans as well, which should be priority #1?

Zimbabwe do not have the infrastructure any longer to facilitate international trade in any way - if South Africa is to take responsibility for this, then South Africa is to receive the income - ergo this results in a unified SA/Zim government (not economy) in order for Zim to take anything positive out of this - otherwise Zim fails yet again which weakens the rand. This proposal is a sugar-coated proposal of a unified Zim/SA government. Not a fsck should ANY South African stand for this...

 

[mac_mac74]

ANC = Another national crisis

 

[Mila]

Kill that thought before it starts to spread.....

 

[mac_mac74]

too late

 

[boramk]

It would just dilute the currency

I repeat to all non-economically educated people:

It would just dilute the currency

 

[Albereth]

Not 100% correct.

If ZIM addopts the Rand it means there is a greater demand for our currency = Higher value. But it can all go very wrong if not handled correctly.

Rubbish. The demand that you speak of by Zimbos for our currency already exists. What would happen is that our currency would be underwritten by the 'worth' of Zimbabwe (currently about 2 Icelandic Krona). This drags us down and devalues the Rand.