Hanke Ranks Zimbabwe’s ZiG as Second Worst Currency Globally

Professor Steve Hanke ranks Zimbabwe’s ZiG as the second worst currency globally, losing 50% of its value against the US dollar in ten months. Factors contributing to its depreciation include lack of trust and the informal economy. The Reserve Bank of Zimbabwe aims to stabilize the currency amid these challenges.

Professor Steve Hanke, a renowned economist and currency analyst, has designated Zimbabwe’s ZiG currency as the second poorest globally, following Venezuela’s Bolivar. Recent evaluations reveal that the ZiG has experienced a depreciation of approximately 50% against the US dollar in just 10 months, driven largely by inflation.

To provide further context, the Bolivar saw a loss of 52%, while the Iranian Rial and Ethiopian Birr ranked third and fourth, losing 24%. Initially valued at US$1: ZiG2.50 last year, the currency now fluctuates between ZiG33 and ZiG40 on the black market.

The undermining of the ZiG’s value is attributed to widespread distrust in the ‘gold-backed currency.’ A significant portion of Zimbabwe’s economy operates informally, resulting in minimal compliance with the government’s mandated rate of US$1: ZiG26 for commercial transactions.

Hanke’s evaluation coincides with recent commitments by the Reserve Bank of Zimbabwe (RBZ), which asserts its dedication to sustaining the ZiG’s stability. However, governmental challenges in enforcing its accepted use, particularly for essential goods like fuel and passport fees, have contributed to its instability.

During a recent gathering with the Tourism Business Council of Zimbabwe (TBCZ), RBZ governor Dr. John Mushayavanhu commented, “There are adequate use case scenarios for ZiG at the moment.” This highlights the ongoing assessment and potential for the currency in transactions despite its current volatility.

In summary, Professor Steve Hanke’s assessment places Zimbabwe’s ZiG currency as the second worst in the world, suffering a 50% depreciation against the US dollar over ten months. The lack of trust in the currency and the informal economy significantly hinder compliance with official exchange rates. While the Reserve Bank of Zimbabwe aims to stabilize the currency, ongoing governmental challenges remain.

Original Source: www.newzimbabwe.com