Zimbabwe launched a new currency, called ZiG, in an attempt to replace the struggling Zimbabwean dollar. The new currency will be backed by gold reserves and a basket of foreign currencies. The move comes as the Zimbabwean dollar has been experiencing significant depreciation in recent months, causing it to be one of the worst performing currencies in the world. Inflation has also been on the rise, reaching over 55% in March. Traders have been increasingly rejecting lower denominations of the old currency, opting instead for transactions in U.S. dollars.
Reserve Bank of Zimbabwe Governor John Mushayavanhu explained that the new currency is being introduced to prevent the local currency from collapsing completely. With the majority of transactions already being conducted in U.S. dollars, the government hopes the new currency will help stabilize the economy. People will have three weeks to exchange the old notes for the new currency. This latest move is part of a series of currency measures taken by the Zimbabwean government since the collapse of the Zimbabwe dollar in 2009, which led to the temporary use of the U.S. dollar as legal tender.
The history of the Zimbabwean currency has been marked by volatility and instability. In 2009, the country was forced to issue a 100 trillion Zimbabwe dollar banknote before scrapping its currency and adopting the U.S. dollar. In 2016, a domestic note was reintroduced, leading to another round of currency fluctuations. The government banned the use of foreign currencies, including the U.S. dollar, for domestic transactions in 2019 but later reversed this decision due to the thriving black market and rapid depreciation of the local currency.
The introduction of the ZiG currency is seen as a critical step in addressing the ongoing economic troubles in Zimbabwe. The hope is that by anchoring the new currency on gold reserves and a basket of foreign currencies, it will help stabilize the economy and ease the currency crisis. With inflation on the rise and traders rejecting the old currency, the government is taking proactive measures to prevent further economic decline. As Zimbabweans begin exchanging their old notes for the new currency, the success of this initiative will determine the country’s economic future and the well-being of its population.
