Five months after its launch, Zimbabwe’s new currency, the gold-backed ZiG (Zimbabwe Gold), is facing significant pressure. An increase in grain imports is rapidly depleting foreign reserves, jeopardizing the government’s goal of establishing the ZiG as the sole currency in the market by 2026. Since its introduction in April at a rate of 13.6 ZiG per U.S. dollar, the currency has plummeted nearly 80% in value on the black market.
In an effort to stabilize the situation, the central bank has injected $64 million into the foreign exchange market this month, following a $50 million injection in July. Officials have stated that they will continue to intervene as necessary to support the ZiG. However, independent economist Prosper Chitambara has noted that the currency’s devaluation reflects a lack of confidence among the public, who have been hesitant to adopt it.
Persistence Gwanyanya, a member of the Reserve Bank of Zimbabwe’s Monetary Policy Committee, emphasized that while adoption has been slow, it is premature to label the currency a failure. He suggested that increasing tax collection in ZiG could encourage wider use. Yet, many market traders remain skeptical.
According to Pricecheck, a website that tracks exchange rates, the ZiG currently trades between 20 and 26 ZiG to $1 on the black market, compared to 13.9 ZiG to $1 on the official market. Trader Carol Munjoma, who sells groceries in downtown Harare, exclusively transacts in U.S. dollars. In July, central bank chief Mushayavanhu reaffirmed the commitment to build trust in the new currency, a sentiment echoed by Gwanyanya, but confidence in the ZiG remains fragile.
SOURCE: https://dew360.net
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