HARARE, Zimbabwe (MANDYNEWS) — Zimbabwe is undergoing a significant monetary shift as it introduces a new currency, backed by gold and foreign currencies, in a bid to stabilize its economy and combat soaring inflation, the country’s central bank announced on Friday.
The move comes amid economic turmoil, with the Zimbabwean dollar plummeting in value by more than 70% since the beginning of the year, driving inflation rates beyond 55% annually as of March. This decline has revived memories of the hyperinflation era under former leader Robert Mugabe.
The newly introduced currency, dubbed Zimbabwe Gold (ZiG), marks the country’s sixth currency since gaining independence in 1980. It will circulate alongside foreign currencies, as stated by central bank governor John Mushayavanhu during a press conference in the capital, Harare.
In a bid to address the economic challenges, the Reserve Bank of Zimbabwe also announced a significant adjustment to its main interest rate, reducing it from 130% to 20%. This move is part of broader monetary policy adjustments aimed at stabilizing the economy and curbing inflation.
The introduction of ZiG follows months of discussions between the central bank and the finance ministry on currency reforms. The new currency’s initial exchange rate will be determined by the closing interbank exchange rate on April 5 and the London PM Fix price of gold on April 4.
Under the new policy, banks are required to convert their existing Zimbabwean dollar balances into ZiG immediately. Additionally, citizens have been given a 21-day window to exchange their old notes and coins for the new currency.
The central bank also revealed that it holds $100 million in cash reserves and 2.52 tonnes of gold valued at $185 million as part of its reserve assets.
The implementation of these measures is anticipated to have a significant impact on inflation, according to Mushayavanhu.
The unveiling of these monetary reforms comes at a critical point in Zimbabwe’s economic trajectory, as officials work to stabilize the country’s currency and alleviate long-standing inflationary concerns.
