Zimbabwe’s Central Bank Confident in Gold-Backed ZiG Currency

The Reserve Bank of Zimbabwe is optimistic about the gold-backed Zimbabwe Gold (ZiG) currency, which was introduced to stabilise the economy against volatility and inflation. Governor John Mushayavanhu indicated that a firm exchange rate against the US dollar is a priority, with plans for complete de-dollarization by 2030. The bank allows businesses to set their own rates and aims to promote acceptance of ZiG across various sectors.

The Reserve Bank of Zimbabwe (RBZ) is optimistic about the gold-backed Zimbabwe Gold (ZiG) currency, viewing it as a strong alternative to the United States dollar within the local economy. During a recent event hosted by the Tourism Business Council of Zimbabwe, RBZ Governor John Mushayavanhu defended the ZiG, asserting that effective monetary policies are bolstering its stability.

Mushayavanhu emphasized, “The ZiG to USD rate is firming up,” underscoring the institution’s commitment to building confidence in the local currency. The ZiG was launched in April 2023 to combat ongoing exchange rate fluctuations and inflation, with the RBZ instituting stringent monetary policies, including elevated interest rates, to mitigate speculative borrowing and stabilize the currency.

The RBZ aims for a complete de-dollarization of the economy by 2030, despite the current dominance of the US dollar, which has adverse effects on local industry competitiveness. To promote the ZiG, the central bank allows businesses to establish their own exchange rates rather than adhering solely to official rates.

Furthermore, the Financial Intelligence Unit (FIU) will not penalize businesses utilizing independent exchange rates as long as reasonable pricing margins are retained. Mushayavanhu disclosed an initiative where certain fuel traders have sought to sell fuel in ZiG to support their domestic operations, expressing confidence that more traders will soon accept ZiG for fuel transactions.

RBZ Deputy Governor Innocent Matshe projected a realistic exchange rate of around US$1/ZiG22, which he believes the market is likely to embrace gradually. Amidst this financial transition, the central bank remains steadfast in ensuring the resilience of the ZiG and reducing the economy’s reliance on the US dollar.

The Reserve Bank of Zimbabwe is working diligently to establish the ZiG currency as a stable alternative to the US dollar through strict monetary policies and market flexibility. The RBZ’s commitment to de-dollarization by 2030, coupled with cooperative initiatives from businesses, illustrates the central bank’s determination to stabilize Zimbabwe’s economy. The RBZ’s actions reflect a calculated approach to curbing inflation and enhancing local currency confidence, aiming for a sustainable financial future.

Original Source: bulawayo24.com