Zimbabwe Launches New Gold-Backed Currency – ZiG

Zimbabwe unveiled a new currency on Friday to replace its struggling predecessor, which has faced depreciation and public rejection in recent months.

The introduction of the new currency, named ZiG, aims to address the ongoing currency crisis that reflects the country’s longstanding economic challenges.

Read: Zimbabwe’s Currency Crashes to Lowest Since Its 2019 Revamp

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Governor John Mushayavanhu of the Reserve Bank of Zimbabwe announced that the ZiG currency will be backed by gold reserves and a mix of foreign currencies, with implementation set to begin on Monday. The Zimbabwe dollar has experienced significant devaluation, becoming one of the world’s poorest performing currencies.

Inflation has surged from 26.5% in December to 55.3% in March, with the official market witnessing a drastic 70% devaluation of the Zimbabwe dollar since January. Traders have increasingly rejected lower denominations of the previous currency, preferring transactions in U.S. dollars, which are also accepted as legal tender in the country.

Mushayavanhu emphasized the importance of preserving the local currency, with a majority of transactions already being conducted in U.S. dollars. The public has been given a three-week window to exchange old notes for the new currency.

This recent currency reform adds to a series of measures taken by the Zimbabwean government following the dramatic collapse of the Zimbabwe dollar in 2009.

The country has witnessed various phases of currency volatility, including the issuance of a 100 trillion Zimbabwe dollar note and temporary adoption of the U.S. dollar as legal tender. Subsequent policy shifts included banning and later readmitting foreign currencies for domestic transactions in response to market dynamics and currency fluctuations.

The announcement of the new currency comes as the country is grappling with the effects of a serious drought, which has destroyed half of the country’s crop of the staple food, maize.

Source:Reuters