ZiG Collapses
17 April 2024
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By Business Reporter- Zimbabwe’s freshly introduced currency, ZiG, has begun a downward spiral in value just a week after its inauguration.

The Reserve Bank of Zimbabwe (RBZ) unveiled ZiG on April 5 with high hopes, initially pegging it at 13.56 against the U.S. dollar. However, the currency quickly weakened, settling at 13.34 by April 17.

Recent reports from VOA reveal a grim reality: ZiG is now exchanging hands at approximately 20 on the black market, signifying a drastic devaluation in a short span.

Street traders in Harare lament the futility of ZiG, deeming it practically worthless.

Despite its electronic trading launch, physical notes and coins are set to enter circulation on April 30, yet scepticism looms large over their impact.

The disparity between plastic money and tangible cash is stark in Zimbabwe’s bustling streets and informal markets. The now-discredited RTGS plummeted to around 40,000 per USD upon ZiG’s arrival, while bond notes fetched a mere 7,000 per US$1. These figures elucidate a long-standing struggle with currency stability.

Samson Kabwe, a kombi conductor, eagerly anticipates the introduction of ZiG’s physical tender, hoping for much-needed change. His sentiment resonates with many who yearn for tangible currency in everyday transactions.

However, Gift Mugano, an esteemed economics professor, harbours doubts regarding ZiG’s longevity, drawing parallels to the ill-fated Zimbabwe dollar.

Citing the failure of previous currency initiatives, Mugano highlights the absence of sustainable production and pervasive trust issues plaguing the economy.

Contrary to Mugano’s scepticism, Mushayavanhu, a government spokesperson, exudes confidence in ZiG’s prospects.

Backed by reserves of gold and other minerals valued at $175 million, supplemented by $100 million in cash, ZiG aims to restore faith in the local currency.

Mushayavanhu envisions a gradual transition toward increased usage of ZiG, culminating in widespread acceptance and utilization.

Despite these aspirations, the central bank remains cautious, stipulating that commodities like fuel will continue to be traded in U.S. dollars, underscoring the arduous journey ahead for ZiG’s stabilization and acceptance.