Effect of Multicurrency Regime on Firm Performance: A Case Study of the Car Rentals Industry in Zimbabwe.

Abstract

The purpose of this study was to evaluate how the adoption of a multicurrency system promotes operational efficiency, financial stability, and overall company performance in the car rental industry in Zimbabwe. The aim was to generate evidence-based views that could guide managerial decision-making and inform policy on currency management in volatile economic environments. The research objectives were (a) to assess the effects of multicurrency usage on business operations and profitability, (b) to identify challenges and opportunities linked to the use of multiple currencies, and (c) to recommend strategies for enhancing performance under multicurrency conditions. The adoption of multiple currencies, particularly the Zimbabwean dollar (ZWL) alongside major international currencies such as the United States dollar (USD), has become a defining feature of Zimbabwe’s post-dollarisation economy. A total population of 200 employees from 5 car rental companies was used, in which a sample of 76 participants was selected using a stratified random sampling technique, whereby participants were chosen according to strata. A quantitative approach was employed and data was gathered from managers, accountants, and operational staff from various car rental firms. Data were analysed statistically to identify key patterns. The findings revealed that multicurrency usage significantly affects pricing strategies, cost structures, and customer purchasing behaviour. Companies operating in this environment face challenges such as exchange rate volatility, pricing inconsistencies, and operational inefficiencies. However, the use of stable foreign currencies was also found to enhance competitiveness, stabilise revenue, and improve overall business performance. The study concludes that while multicurrency usage presents operational difficulties, it offers a critical cushion against hyperinflation and financial uncertainty. It recommends consistent monetary policies, transparent exchange rate systems, and strategic financial planning for firms operating under multicurrency conditions.