Zimbabwe’s Central Bank introduced a new currency supported by gold on Friday in an effort to address extreme inflation and stabilize the country’s struggling economy.
The new currency, called ZiG or Zimbabwe Gold, will take the place of the depreciating Zimbabwean dollar that has caused a surge in inflation, according to Reserve Bank governor John Mushayavanhu.
“Starting today, banks will convert the current Zimbabwe dollar balances into the new currency,” he said while presenting a monetary policy statement.
He also mentioned that the ZiG will be completely supported by a mix of reserves including foreign currency and valuable metals, particularly gold.
The goal of this change is to create simplicity, certainty, and predictability in Zimbabwe’s financial matters. Additionally, new banknotes ranging from 1 to 200 ZiG were revealed.
The value of the Zimbabwean dollar has dropped nearly 100 percent compared to the US dollar over the past year.
As of Friday, it was officially trading at about 30,000 against the US dollar, and at 40,000 on the black market, as reported by tracker Zim Price Check.
The poor performance of the Zimbabwean dollar has contributed to the high inflation rate in the southern African country, which reached 55 percent in March according to official data, after climbing to well over 100 percent last year.
This situation has added pressure on the country's 16 million inhabitants, who are already facing widespread poverty, high unemployment, and a severe drought caused by the El Nino weather pattern.
AFP
