Reserve Bank of Zimbabwe has launched a gold-backed currency called Zim Gold (ZiG) in a bid to fight inflation. This is the sixth time Zimbabwe will be changing its currency, as it struggles to reign-in run away inflation.
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Zimbabwe’s dollar had lost almost three quarters of its value against the dollar since a relaunch last year, stoking inflation which was measured at 55.3 percent in March versus 47.6 percent the month before.
The country has battled to tame inflation since it hit a record 500 billion percent in 2008 when it was forced to abandon the Zimbabwe dollar.
The new currency will be introduced next Monday at 13.56 per United States dollar in the coming week.
New Reserve Bank of Zimbabwe Governor John Mushayavanhu said the Zimbabwe Gold (ZiG), would replace the last incarnation of the Zimbabwe dollar, and would be backed by a select group of foreign currencies, gold and other precious metals the country produces.
“With effect from 5 April 2024, banks shall convert the current Zimbabwe dollar balances into the new currency which shall be called Zimbabwe Gold to foster simplicity, certainty, and predictability in monetary and financial affairs,” the central bank said in a monetary policy statement. “The new currency will co-circulate with other foreign currencies in the economy.”
The swap rate will be guided by the closing interbank exchange rate and the price of gold as at 5 April 2024. The swap rate shall be used to make legitimate conversions of all ZW$ deposits in the banking sector; all ZW$ loans and advances made by the sector; ZW$ treasury bills; all outstanding auction allotments; all export surrender obligations; all prices of goods and services in ZW$; and any other ZW$ denominated obligations.
On conversion of all current ZW$ balances, banks are directed to rename all the current ZW$ accounts as ZiG accounts. Gold-backed Digital Token (GBDT) accounts will no longer be called ZiG accounts but will be known as GBDT accounts.
All ZW$ notes and coins held by account holders will be credited into their ZiG accounts using the applicable conversion factor. The banks will continue to accept these deposits for a period of 21 days after 5 April 2024.
Mushayavanhu replaced John Mangudya as governor last month.
The new governor said that in order to protect the value of the new currency, the apex bank would limit lending to the government. Lending to the government has been highlighted as a key source of inflation that engulfed the country in 2008.
On Thursday, President Emmerson Mnangagwa inspected the central bank’s vaults that Mushayavanhu – who was appointed earlier this year – said hold 1.1 tonnes of solid gold.
The bank also has almost 1.5 tonnes more abroad, as well as $100m in cash and precious minerals – such as diamonds, that if converted into gold would account for another 0.4 tonnes, Mushayavanhu said.
Special arrangements has been made for r those without bank accounts to swap their ZW$ notes and coins at POSB and AFC Commercial Bank within 21 days after 5 April 2024, the policy statement read.
Nnamdi Maduakor is a Writer, Investor and Entrepreneur
