Zimbabwe Introduces New Gold Backed Currency ‘ZiG’ Amidst Economic Crisis

In a bid to stabilize its volatile currency and address the ongoing economic challenges, Zimbabwe has announced the introduction of a new currency called ZiG. This move marks the sixth attempt by the country to establish a functional local currency since 2008.

Central Bank Governor John Mushayavanhu unveiled the new currency at a press conference in Harare on Friday, revealing that ZiG will be backed by a basket of foreign currencies, gold, and other precious metals. The official launch of ZiG is scheduled for April 8, with an introductory exchange rate set at 13.56 ZiG per dollar and an initial interest rate of 20%.

Mushayavanhu emphasized the importance of having a stable national currency, stating, “We want a solid and stable national currency in this country. It does not help to print money. Certainly under my watch, it is not going to happen.”

The decision to replace the current Zimbabwean dollar comes amidst severe economic challenges, with the currency losing four-fifths of its value on the official market since the beginning of the year. This depreciation has led to more than 80% of transactions being conducted in foreign currencies, particularly the US dollar.

President Emmerson Mnangagwa had hinted at the introduction of a new currency in February, with Finance Minister Mthuli Ncube suggesting that it may be backed by gold. The central bank’s decision to postpone its monetary policy statement was aimed at finalizing the plan for the structured currency.

Mushayavanhu, who assumed the role of central bank governor earlier than planned, pledged to implement more orthodox monetary policies, distancing the bank from quasi-fiscal activities. He stated, “We are not going to be involved in any quasi-fiscal activities. I have no intention to do other people’s jobs.”

The inflation rate, which stood at 55.3% in March, is expected to decline to 2% to 5% by the end of the year as a result of the currency changes, according to the governor. However, the success of the new currency hinges on its ability to restore confidence in Zimbabwe’s financial system amidst years of economic turmoil.

Ozioma Samuel-Ugwuezi

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