Zimbabwe’s new ZiG currency gains on second day of trading
TLDR
- Zimbabwe's new gold-backed currency, ZiG, shows strength post-launch, gaining 0.2% to 13.53 per US dollar.
- Businesses must transition to ZiG by April 12 as part of ongoing efforts to stabilize Zimbabwe's local currency.
- The International Monetary Fund supports Zimbabwe's move but urges careful assessment of the new currency before a comprehensive evaluation.
Zimbabwe's new gold-backed currency, the ZiG, showed signs of strength on the day after its debut, despite causing disruptions in commerce as businesses scrambled to adapt to the new unit. It saw a slight improvement, gaining 0.2% to 13.53 per US dollar compared to its initial rate of 13.56 per dollar.
Governor John Mushayavanhu announced this exchange rate during the currency's unveiling last Friday as part of Zimbabwe's ongoing efforts to establish a stable local currency. Businesses have until April 12 to fully transition their electronic systems to ZiG, Mushayavanhu said at the weekend.
The International Monetary Fund (IMF), while urging the liberalization of the exchange rate in February, expressed support for Zimbabwe's latest measures to restore macroeconomic stability. However, the IMF noted the need for time to assess the design and implications of the new currency arrangement before providing a comprehensive evaluation.
Key Takeaways
The ZiG, short for Zimbabwe Gold, marks the country's sixth attempt to revive its national currency. Its predecessor, the Zimbabwe dollar, faced consistent depreciation throughout this year before being officially abandoned on April 5th. Backed by 2,522 kilograms of gold and approximately $100 million in foreign currency reserves, as declared by the central bank, the new currency aims to instill stability. However, the transition from the Zimbabwean dollar to the ZiG has encountered challenges. Many banks and businesses are still in the process of updating their systems to accommodate ZiG transactions. Only a third of the 27 financial institutions connected to the ZimSwitch national payments platform are currently equipped to handle ZiG payments, highlighting the hurdles in adopting the new currency.
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