Zimbabwe introduced a new currency, ZiG, in an effort to address the ongoing currency crisis that has plagued the country's economy. The Reserve Bank of Zimbabwe announced that the new currency will be backed by gold reserves and a basket of foreign currencies, with the aim of stabilizing the economy.
Over the past few months, the Zimbabwe dollar has experienced significant depreciation, leading to a loss of over 70% of its value on the official market since January. This depreciation has resulted in high inflation rates, with figures rising from 26.5% in December to 55.3% in March.
Traders have been reluctant to accept lower denominations of the old currency, with many preferring transactions in U.S. dollars, which are also legal tender in Zimbabwe. The government hopes that the introduction of ZiG will encourage the use of the local currency and reduce reliance on foreign currencies.
The new currency exchange process will begin on Monday, giving people three weeks to exchange their old notes for the new ZiG currency. This move is part of a series of currency measures implemented by the Zimbabwean government in response to the economic challenges faced by the country.
Zimbabwe has a history of currency volatility, with the Zimbabwe dollar collapsing in 2009 and being temporarily replaced by the U.S. dollar. The reintroduction of a domestic currency in 2016 led to further instability, including policy changes such as the banning and subsequent unbanning of foreign currencies for domestic transactions.
The government's decision to launch ZiG reflects its commitment to preserving the local currency and addressing the economic difficulties faced by the country. By anchoring the new currency on gold reserves and foreign currencies, Zimbabwe aims to restore stability to its financial system and boost confidence in the local economy.
