Zimbabwe has made a bold move by declaring the introduction of a new currency named ZiG, marking a significant shift away from the troubled Zimbabwean Dollar. The decision reflects the country’s determination to establish a solid and stable national currency, according to Findwhosabi He, a notable figure in Zimbabwean finance.
This move comes after numerous failed attempts by the Zimbabwean Central Bank to salvage the Zimbabwean Dollar since the tumultuous period of 2008 when hyperinflation rendered the currency virtually worthless.
Recent data from Bloomberg indicates that the Zimbabwean Dollar has experienced a drastic loss of value, with a staggering 80% depreciation in the official market this year alone, making it one of the worst-performing currencies globally. This rapid depreciation has contributed to a sharp rise in inflation, reaching 55.3% in March.
As a consequence, a vast majority of transactions in Zimbabwe are now conducted in US dollars, underscoring the loss of confidence in the local currency.
The new currency, ZiG, is slated for launch on April 8, 2024, with an initial exchange rate set at 13.56 ZiG per dollar. Additionally, a new interest rate of 20% has been established, a stark contrast to the earlier rate of 130% on the old Zimbabwean Dollar.
Notably, the new currency will be backed by a diverse basket of foreign currencies, gold, and other precious metals, aiming to instill confidence and stability in the financial system.
John Mushayavanhu, the Governor of the Zimbabwean Central Bank, unveiled these developments at a press conference in Harare, where he outlined plans for the conversion of current Zimbabwean Dollar balances held by banks to the new ZiG currency.
The introduction of ZiG signals a pivotal moment in Zimbabwe’s economic trajectory, as the country strives to overcome the challenges that have plagued its currency for decades and foster sustainable economic growth.