Tue. May 28th, 2024

Zimbabwe has introduced a new gold-backed currency called ZiG – the name stands for “Zimbabwe Gold”.

It is the latest attempt to stabilise an economy that has lurched from crisis to crisis for the past 25 years.

Unveiling the new notes, central bank governor John Mushayavanhu said the ZiG would be structured, and set at a market-determined exchange rate.

The ZiG replaces a Zimbabwean dollar, the RTGS, that had lost three-quarters of its value so far this year.

Annual inflation in March reached 55% – a seven-month high.

Zimbabweans have 21 days to exchange old, inflation-hit notes for the new currency.

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

The new ZiG banknotes come in denominations of between 1 and 200, he said.

Coins will also be introduced to overcome the shortage of US coins, which has seen people receive change in sweets, small chocolates and pens.

Mr Mushayavanhu said the new currency was being implemented with immediate effect and banks must convert current Zimbabwe dollar balances to the ZiG.

He committed to ensuring that the amount of local currency in circulation was backed by equivalent value in precious minerals – mainly gold – or foreign exchange, in order to prevent the currency losing value like its predecessors.

Zimbabwe has tried a variety of means to stabilise its currency since 2008, when the bank was printing Z$10tn notes as inflation ran out of control.

It then abolished its own currency and for many years only used foreign banknotes such as the US dollar and the South African rand.

The announcement of the new currency comes as the country is grappling with the effects of a serious drought, which has destroyed half of the country’s crop of the staple food, maize.

By Joy

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