Zimbabwe To Make Chinese Yuan Legal Tender

Zimbabwe on Monday announced its plans to make the Chinese yuan legal tender as it seeks to increase trade with Beijing, AFP reported. The announcement comes after China confirmed its plans to cancel $40 million in debts.

“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,” Finance and Economic Development Minister Patrick Chinamasa said in a statement.

Engulfed in hyperinflation, which peaked at about 500 billion percent, Zimbabwe abandoned its own currency in 2009 and started using various foreign currencies, including the US dollar and the South African rand. The yuan was also added to the basket of the foreign currencies, however, its use wasn’t approved for public transactions in the market.

Use of the yuan “will be a function of trade between China and Zimbabwe and acceptability with customers in Zimbabwe,” the minister said.

Chinamasa also pointed out that 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”.

Nehanda Radio reported on Saturday that the southern African country could start using the yuan as early as 2016.