Zimbabwe Central Bank Optimistic About Gold-Backed ZiG Currency

The Reserve Bank of Zimbabwe expresses confidence in the gold-backed ZiG currency as a viable alternative to the US dollar. Introduced to manage exchange rate volatility, there are supportive monetary policies in place. The central bank aims to fully de-dollarize the economy by 2030 while enhancing ZiG’s market acceptance through flexible exchange rates.

The Reserve Bank of Zimbabwe (RBZ) maintains a positive outlook on the gold-backed Zimbabwe Gold (ZiG) currency, advocating its role as a practical alternative to the United States dollar within the national economy. During a recent event hosted by the Tourism Business Council of Zimbabwe (TBCZ), RBZ Governor John Mushayavanhu defended the ZiG, asserting that monetary measures are securing its stability.

Mushayavanhu stated, “The ZiG to USD rate is firming up,” highlighting that bolstered confidence in the local currency ranks as the bank’s primary focus. The ZiG was introduced in April 2023 to combat Zimbabwe’s ongoing exchange rate volatility and inflation. The central bank has enacted stringent monetary policies, including elevated interest rates, to mitigate speculative borrowing and stabilize the currency.

The Governor emphasized a long-term goal of completely de-dollarizing the economy and re-establishing a mono-currency system by 2030. He acknowledged that despite the US dollar’s current predominance, its sustained usage hampers local industry competitiveness and the RBZ’s ability to manage effective monetary policy.

To improve the ZiG’s acceptance, the RBZ has permitted businesses to determine their own exchange rates rather than adhering strictly to the official rate. Furthermore, the Financial Intelligence Unit (FIU) will not impose penalties on companies utilizing independent exchange rates, provided they maintain reasonable pricing margins.

Mushayavanhu indicated that certain fuel traders have approached the RBZ with intentions to transact in ZiG for local operations, expressing optimism that more vendors will follow suit in accepting ZiG for fuel purchases. “We do not want to go back to long queues and fuel shortages,” he reassured, emphasizing economic stability’s importance to the bank’s policy decisions.

In tandem, RBZ Deputy Governor Innocent Matshe anticipates that a feasible exchange rate aligned with economic fundamentals should settle around US$1/ZiG22, a level expected to gain market acceptance gradually. The central bank’s commitment to enhancing the ZiG’s durability is evident as Zimbabwe navigates its transition toward a less US dollar-dependent future.

The Reserve Bank of Zimbabwe exhibits confidence in the gold-backed ZiG currency as a credible alternative to the US dollar, aiming for economic stability and a future with a mono-currency system by 2030. The implementation of flexible exchange rates and supportive policies aims to enhance acceptance and mitigate challenges associated with dollar dependency. As the RBZ pursues these objectives, the engagement of local businesses is crucial for the successful transition.

Original Source: bulawayo24.com