ZIMBABWE’S latest currency, the Zimbabwe Gold (ZiG), has made an impressive debut, marking a 1.1 percent increase against the US dollar within its first week of trading. This development comes amidst heightened global tensions, propelling gold prices upwards and fostering investor interest in safe-haven assets.
‘The launch of ZiG has been met with enthusiasm in the market, evident from its strong performance against the US dollar,’ remarked Reserve Bank of Zimbabwe Governor John Mushayavanhu.
The Reserve Bank of Zimbabwe introduced ZiG as a replacement for the beleaguered old Zimbabwean dollar, which had succumbed to hyperinflation. ZiG commenced trading on April 5, with an initial exchange rate of 13.56 ZiG per US dollar. By the end of its inaugural week, ZiG closed at 13.41 ZiG per US dollar, reflecting a promising upward trajectory.
‘We are pleased with the positive response from banks, traders, and businesses in adopting ZiG as their preferred currency,’ Mushayavanhu stated, emphasising the smooth transition from the old Zimbabwean dollar.
Despite initial market uncertainties, major banks, traders, and businesses seamlessly transitioned their old Zimbabwean dollar holdings to ZiG. This successful conversion sets the stage for ZiG to coexist alongside other foreign currencies under Zimbabwe’s multi-currency framework until 2030.
‘The introduction of ZiG provides a much-needed stability to our monetary system,’ commented investment banker Nigel Chanakira during a radio interview.
The rollout of electronic ZiG has already begun, with physical ZiG notes and coins slated for circulation starting April 30. Denominations will range from 1 to 200 ZiG, including half and quarter ZiG coins. Governor Mushayavanhu reaffirmed ZiG’s backing by a combination of foreign exchange reserves and precious minerals, primarily gold.
Mushayavanhu reassured the public that ZiG’s launch was supported by robust reserves, totalling $285 million, comprising both cash and gold reserves. This substantial backing aims to maintain stability and confidence in the currency, with Mushayavanhu stressing the central bank’s commitment to preserving adequate reserves to uphold ZiG’s value.
‘We are committed to ensuring ZiG’s strength and reliability as a medium of exchange,’ Mushayavanhu affirmed.
While ZiG’s introduction led to a depreciation of the old Zimbabwean currency, bond notes, informal traders have expressed reluctance to accept them, exacerbating change shortages. This shift has affected commuters, who now face increased transportation costs due to the scarcity of bond notes.
‘Change is here with the new currency. We must give the new governor a fighting chance,’ emphasised Nigel Chanakira, addressing public doubts about the governor’s ability to handle the currency crisis.
Despite initial scepticism, Mushayavanhu is optimistic about ZiG’s potential to alleviate Zimbabwe’s long-standing currency woes. He aims to gradually increase ZiG’s adoption, implementing measures such as mandating tax payments in ZiG and designating specific services purchasable only with ZiG.
Economists and financial experts have expressed cautious optimism regarding ZiG’s prospects. Investment banker Nigel Chanakira urged the public to give the new currency a chance, emphasizing the importance of rebuilding confidence in ZiG to ensure its success.
Finance Minister Mthuli Ncube outlined targeted interventions to bolster ZiG usage, including incentivising businesses to conduct transactions in ZiG and reducing interest rates. These efforts align with Zimbabwe’s broader de-dollarization agenda, aiming for a gradual transition towards a single currency by 2030.
With concerted efforts from the government and widespread adoption across various sectors, ZiG may hold the key to resolving Zimbabwe’s enduring currency crisis, ushering in a new era of economic stability and growth.
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