Zimbabwe unveils new currency: After its previous currency collapsed under the weight of extreme depreciation and popular rejection, Zimbabwe launched a new currency on Friday, marking a major step toward ending the country’s economic crisis. An attempt to calm the country’s economy that has been in a tailspin for a while has led to the launch of a new currency called ZiG.
John Mushayavanhu, governor of the Reserve Bank of Zimbabwe, made the announcement that ZiG will be supported by a basket of foreign currencies and gold reserves. He said that implementation is scheduled to begin on Monday. The Zimbabwe dollar has been one of the worst performing currencies in the world due to its fast devaluation, and this decision is a reaction to the increasing pressure on the currency.
The Zimbabwean dollar’s precipitous decline is cause for grave concern; since January, its value on the official market has dropped by more than 70%. Inflation rates have been steadily climbing, worsening the situation. In March, they reached 55.3%, according to government estimates, up from 26.5% in December.
While both the Zimbabwe dollar and smaller denominations of the old currency are still legally tender, traders are increasingly opting to transact in US dollars instead. Given that around 85% of transactions are made in U.S. dollars, Mushayavanhu stressed the significance of maintaining the sustainability of the local currency.
As a result of economic volatility, the Zimbabwean government has implemented a number of currency measures, the most recent of which is this proclamation. After the Zimbabwean dollar’s precipitous devaluation in 2009, the government of the country went through a series of wildly unpredictable monetary policies, such as temporarily adopting the US dollar as legal cash and printing a 100 trillion dollar notes.
Zimbabwe has failed to provide a long-term solution to its currency instability, despite prior efforts to stabilize it, such as prohibitions on local transactions involving foreign currencies. Due to extensive noncompliance and flourishing black market activity, policy reversals like the readmittance of the U.S. dollar occurred after the 2016 reinstatement of a domestic note, which was met with ongoing volatility.
The resumption of efforts to fix Zimbabwe’s currency problems and stabilize the economy is symbolized by the debut of ZiG. The key to its success, though, will be a combination of strong implementation and ongoing efforts to tackle the country’s fundamental economic problems.
