Zimbabwe Making Chinese Yuan Legal Currency

Finance and Trade
22/12/2015 09:55

In an unusual step, Zimbabwe says that it will make the Chinese yuan legal tender in the country after Beijing agreed to cancel $40 million in debts. Finance Minister Patrick Chinamasa said the move comes as Zimbabwe seeks to increase trade with Beijing, and usage of the yuan “will be a function of trade between China and Zimbabwe and acceptability with customers in Zimbabwe." China is Zimbabwe’s biggest trading partner following Zimbabwe’s isolation by former western trading partners due to Harare’s human rights record. Chinese firms are involved in diamond mining in the Marange region.

Zimbabwe abandoned its own dollar in 2009 after hyperinflation, which had peaked at around 500 billion percent, rendering it unusable. It then started using several foreign currencies, including the U.S. dollar and the South African rand. The yuan was later added to the basket of the foreign currencies, but its use had not been approved yet for public transactions in the market dominated by the American currency.