Zimbabwe central bank welcomes idea of rand link

HARARE – Zimbabwe's outgoing central bank governor Gideon Gono has welcomed the idea of adopting South Africa's rand currency as an anchor for the virtually worthless Zimbabwean dollar, state media reported on Wednesday.

"Suffice to say that an anchor currency for the Zimbabwe dollar … would act as a serious stimulus factor towards the much-needed stability of the Zimbabwean dollar and the economy in general and, (is) therefore most welcome," Gono told the state-owned Herald newspaper.

South African President Kgalema Motlanthe on Sunday said Zimbabwe could adopt the rand, but did not give details.

South African central bank spokeswoman Samantha Henkeman said the Reserve Bank had not been formally approached about the proposal and so declined to comment.

Namibia, Swaziland and Lesotho all use the rand alongside their own currencies but South Africa’s Reserve Bank Governor Tito Mboweni has in the past ruled out a formal arrangement with Zimbabwe.

Gono’s comments came as Zimbabwe’s opposition leader Morgan Tsvangirai prepared to take office as prime minister on Wednesday in a deal with old rival President Robert Mugabe aimed at saving the ruined country.

The new government is faced with taming hyperinflation which means prices double every day. The central bank has repeatedly revalued its dollar and lopped another 12 zeros off the battered currency earlier this month.

The rand is already used widely on Zimbabwe’s black market.

Gono said there were several factors to be considered before the countries could be linked.  

"These are not matters that can be done overnight, so I don’t want anyone to underestimate these technical processes and harmonisation," Gono added.

"Furthermore, the country is going through a momentous period of change not only in the area of the economy, but the political landscape as well."

The rand was little changed on the news, trading 0.91 percent firmer against the U.S. dollar at 9.85 by 0838 GMT.