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Zimbabwe replaces local dollar with new currency called Zimbabwe Gold (ZiG)

The new currency will be backed by reserves of foreign currency and precious metals mined in the country

HARARE, April 5. /TASS/. Zimbabwe has rolled out a new national currency called Zimbabwe Gold (ZiG), a TASS correspondent reported from a press conference of the country’s Central Bank in Harare.

"The Reserve Bank of Zimbabwe announces the introduction of a new currency - Zimbabwean gold (ZiG)," the bank’s Governor, John Mushayavanhu, announced at the press conference.

"This currency will be issued in the form of notes and coins. All reserves of the Zimbabwean dollar will be transferred to it. The new currency will be backed by reserves of foreign currency and precious metals mined in the country. Its exchange rate to the US dollar will be 13.5 Zimbabwean gold per US dollar," he added.

As the head of the Central Bank of Zimbabwe explained, the new national currency is being introduced due to the instability of the exchange rate of the Zimbabwean dollar to the US dollar and high inflation. As a result, there was a need to restore confidence in the national currency and the policies of the Central Bank.

Mushayavanhu noted the resilience of the Zimbabwean economy. Due to exchange rate speculation, year-on-year inflation jumped from 26.5% in December 2023 to 55.3% in March 2024. However, GDP growth this year is expected to be 3.5%, inflation at the end of the year should drop to 2-5%, and the foreign trade surplus should grow to $204.5 million.

Mushayavanu attributed the instability of the Zimbabwean currency and its exchange rate to the high demand for foreign exchange and its use as a store of value, the gap between the banking and parallel rates of exchange of the Zimbabwean dollar, and the shrinking scope of application of the Zimbabwean dollar. Based on this, the Reserve Bank of Zimbabwe is moving to a market-oriented policy for managing the US dollar exchange rate in Zimbabwe, which links the exchange rate of the national currency to a basket of reserves from foreign currencies, gold reserves and precious metals reserves.

To do this, instead of an auction of foreign currencies, an interbank currency trading market is being introduced on the principle of voluntary purchase and voluntary sale. The Central Bank will allocate 25% of export revenues for these purposes.

The new national currency introduced by the Reserve Bank of Zimbabwe will be tied to a basket of currencies and will be backed by reserves of foreign currency and gold. Starting on April 5, the Reserve Bank of Zimbabwe will transfer all accounts in Zimbabwean dollars to Zimbabwe Gold, which will circulate in the country along with foreign currency. Three weeks are given for the transfer of existing Zimbabwean dollar accounts to ZiG. ZiG coins and notes will be issued in denominations from 1 to 200. The new currency will be backed by foreign currency reserves of $100 million and 2,522 tons of gold.