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Zimbabwe’s New Gold-Backed Currency ZiG to Replace its Dollar in April

Zimbabwe’s New Gold-Backed Currency ZiG to Replace its Dollar in April

In a move to halt the persistent decline of its local currency, Zimbabwe has introduced a new unit called ZiG. This currency will be supported by a mix of foreign currencies, gold, and other precious metals.

Central Bank Governor John Mushayavanhu announced this at a press conference in Harare on Friday, saying that banks would convert all their Zimbabwean dollar balances into ZiG.

As the Zimbabwean dollar plummeted this year from below 6,000 to over 29,000 against the U.S. dollar, annual inflation surged beyond 55% in March. Reuters says this resurgence of inflation stirred bitter memories of hyperinflation during the era of former leader Robert Mugabe.

What the CBN Governor said:

“We want a solid and stable national currency in this country,” he said. “It does not help to print money. Certainly under my watch, it is not going to happen,” he said.

He said the central bank would also introduce a market-determined exchange rate.

“If we implement these measures we expect them to have an impact on inflation,” Mushayavanhu said.

The US dollar, which accounts for 85% of transactions, will remain legal tender.

The newly introduced ZiG banknotes will be available in denominations of 1, 2, 5, 10, 50, 100, and 200.

According to Bloomberg, the new currency will be introduced at 13.56 per dollar on April 8. Additionally, interest rates will be adjusted to a new level of 20%, a huge decrease from the previous rate of 130% on the old currency.

In February, Finance Minister Mthuli Ncube said that authorities were contemplating tying the exchange rate to tangible assets like gold and establishing a currency board.

Business Insider

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