By Business Reporter- The Government’s latest currency experiment, the ZiG, launched in April 2024 to stabilize the economy, has collapsed within six months, triggering a wave of uncertainty.

On Monday, the ZiG plunged further against the US dollar following a 43% devaluation by the Reserve Bank of Zimbabwe (RBZ) on September 27. 

The currency was quoted at 24.88 ZiG per dollar, up from 24.39 last Friday, marking a steep decline.

Businesses are sounding the alarm as they face crippling losses trading in the rapidly devaluing currency, with many threatening to shut down. 

Despite attempts to stabilize the economy by backing the ZiG with gold reserves and setting a structured exchange rate, rampant inflation and ongoing fiscal deficits are undermining the currency.

The collapse of the ZiG is symptomatic of Zimbabwe’s deeper economic issues, particularly its failure to tackle inflation at the root. 

Economist Lyle Begbie of Oxford Economics warns that the currency devaluation is unlikely to be sufficient, as inflationary pressures and limited access to international capital markets continue to weigh down the economy.

RBZ Governor John Mushayavanhu attributed the currency’s fall to artificial demand for foreign currency and inflationary pressures, which have outweighed the firming gold prices meant to back the ZiG. 

With inflation rates climbing to 5.8% in September 2024, the government’s promises of currency stability remain elusive.

The ZiG, initially designed to replace the plummeting Zimbabwean dollar, now faces the same fate, raising fears of an uncontrollable inflation spiral.