Zimbabwe's Mugabe enacts bond notes law

Zimbabwean President Robert Mugabe has issued regulations to provide legal backing to the bond notes that the country intends to introduce this week to ease current cash shortages.

According to an extraordinary government gazette issued Monday night, Mugabe used the Presidential Powers (Temporary Measures) Act to amend the Reserve Bank of Zimbabwe Act to designate bond notes as legal tender.

The bond notes will trade at par with the U.S. dollar, according to the notice.

The RBZ has said the bond notes will be backed by a 200 million U.S. dollars facility provided by the African Export Import Bank.

At least 65 million worth of bond notes in 2 and 5 dollars notes will be released on the market by December, according to the RBZ.

Nationwide awareness campaigns on the bond notes started on October 31.

Plans to introduce the bond notes have triggered panic and uncertainty in the market as Zimbabweans fear it may be a ploy by government to reintroduce the moribund Zimbabwe dollar.

Zimbabwe dumped its worthless currency in 2009 in favor of the U.S. dollar and eight other currencies that include the South African rand, British pound, Chinese yuan, Japanese yen and Australian dollar.

Zimbabwe has been facing a shortage of U.S. dollar notes, the main currency in circulation, since the beginning of this year due to a widening trade deficit and money laundering.

The shortages have worsened in recent weeks as skeptical Zimbabweans hold on to their U.S. dollar notes. Endit