ZIMBABWE unveiled a new currency, ZiG, on Friday in a strategic move to confront the country’s persistent economic challenges marked by currency depreciation and rejection. Reserve Bank of Zimbabwe Governor John Mushayavanhu announced the launch of ZiG, backed by gold reserves and a basket of foreign currencies, with implementation scheduled to commence on Monday.
The introduction of ZiG comes at a critical juncture as the Zimbabwean dollar faces significant devaluation, ranking among the world’s worst-performing currencies. Mushayavanhu highlighted the urgency, stating, ‘We are doing what we are doing to ensure that our local currency does not die.’
The Zimbabwe dollar has experienced a substantial decline, losing over 70 percent of its value on the official market since January, with further depreciation observed on the thriving black market. Inflation rates surged from 26.5 percent in December to 55.3 percent in March, underscoring the severity of the economic crisis.
Traders’ rejection of lower denominations of the previous currency has fuelled reliance on US dollars for transactions. Mushayavanhu acknowledged the prevalent usage of foreign currencies, noting that ‘almost 85 percent of the transactions are being conducted in US dollars.’
Friday’s announcement represents the latest effort by Zimbabwean authorities to stabilise the economy amidst longstanding challenges. Previous interventions, including the issuance of a 100 trillion Zimbabwe dollar banknote and the temporary adoption of the US dollar, have aimed to mitigate currency volatility.
In response to economic pressures, Governor Mushayavanhu emphasised the necessity of currency reform, urging swift action to restore confidence in the financial system. The introduction of ZiG signals a proactive approach to address Zimbabwe’s economic turmoil, underscoring a commitment to stability and sustainability.
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