Zimbabwe’s recently launched gold-backed currency, the ZiG, has already weakened to its lowest level against the US dollar since its debut a month ago.
Despite this early depreciation, Zimbabwean authorities remain optimistic about the ZiG’s future, with plans to achieve full convertibility and bolster its appeal.
The ZiG, introduced on April 5th, 2024, is the sixth attempt to establish a stable local currency since 2008.
Backed by 2.5 tons of gold and US$100 million in foreign reserves, the ZiG is intended to combat the hyperinflation and triple-digit inflation that have plagued Zimbabwe’s economy.
According to data from the Reserve Bank of Zimbabwe, seen by Bloomberg, the ZiG is currently trading at 13.67 to the US dollar, a slight decline from its initial exchange rate of 13.56.
Finance Minister Mthuli Ncube last week expressed confidence in the ZiG’s ability to rebound, highlighting government measures to prevent its collapse.
Ncube stated plans to achieve full convertibility of the ZiG, potentially through engaging Zimbabwe’s largest trading partners, like South Africa, Mozambique, and Zambia, to accept the new currency.
“Zimbabwe will seek full convertibility of its new currency, the ZiG, as a way to further support the unit and protect it from collapse,” Ncube said.
Ncube was hopeful that the ZiG will succeed in stabilising prices and fostering economic growth. He pointed to the establishment of a Financial Intelligence Unit to address potential threats to the new currency and called on investors to view Zimbabwe as a secure investment destination.
“This currency will succeed because we are putting measures ( Financial Intelligence Unit) to deal with those who undermine the newly launched currency.
“ZiG seeks to remonetise the economy to restore investor confidence and this will be done through restoring confidence in the currency itself. Key is achieving price and exchange-rate stability,” he said.