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Zimbabwe to adopt China's yuan as legal currency

Zimbabwe to adopt China's yuan as legal currency

Zimbabwe

Zimbabwe is planning to adopt the Chinese yuan as legal tender in return for debt cancellation worth about $40m.

China has become the largest investor in Zimbabwe, which has been shunned by the West over its human rights record and is struggling to emerge from a deep 1999-2008 recession that forced the government to ditch its own currency in 2009.

Zimbabwe’s Finance Minister Patrick Chinamasa announced the plan in a statement on Monday and said the use of the yuan “will be a function of trade between China and Zimbabwe and acceptability with customers in Zimbabwe”.

China said it is canceling our debts that are maturing this year and we are in the process of finalizing the debt instruments and calculating the debts

In the last five years, Zimbabwe has received more than $1bn in low-interest loans from China, which is Harare’s second largest trading partner after South Africa.

“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,” Chinamasa said.

Zimbabwe abandoned its own currency in 2009 after hyperinflation rendered the Zimbabwean dollar worthless. It then started using a slew of foreign currencies, including the US 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 greenback.

China has become the largest investor in Zimbabwe, which has been shunned by the West over its human rights record and is struggling to emerge from a deep 1999-2008 recession that forced the government to ditch its own currency in 2009.

On a rare visit to Harare by a Chinese leader, President Xi Jinping witnessed the signing of 10 economic agreements earlier this month, including a $1bn loan to expand Zimbabwe’s largest thermal power plant.

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