Six months after its launch, Zimbabwe’s gold-backed ZiG currency is facing significant challenges, forcing a devaluation that has raised doubts about its viability.
Introduced in April 2024 as a solution to Zimbabwe's persistent currency and economic crises, the ZiG aimed to stabilise the local economy and reduce reliance on the US dollar.
However, by late September, the Reserve Bank of Zimbabwe (RBZ) had to devalue the ZiG by 43%, from 13.56 ZiG to 24.4 ZiG per US dollar, due to the widening gap between official and black-market exchange rates. By October 23, the unofficial rate had surged to 40-50 ZiG per dollar, far exceeding the official rate.
Businesses, forced to trade at the official rate, threatened to shut down if the discrepancies weren’t addressed. Despite the central bank governor, John Mushayavanhu, downplaying the devaluation, claiming it reflected market realities, the currency’s instability and depreciation have left businesses and consumers frustrated.
The introduction of the ZiG followed the collapse of the Zimdollar and its replacement by the US dollar in 2009, after hyperinflation caused a complete loss of value. While the ZiG was meant to restore confidence in a local currency, many Zimbabweans continue to prefer the US dollar, which handles 85% of transactions.
High inflation, economic mismanagement, and a history of failed currency policies have contributed to the population’s scepticism, leaving Zimbabwe's government still struggling to stabilise its economy.
Source:
Al jazeera
