Zimbabweans have 21 days to transform their outdated money into new cash, in response to the central financial institution.
Zimbabwe’s central financial institution has launched a brand new “structured foreign money” backed by gold, because it seeks to sort out sky-high inflation and stabilise the nation’s long-floundering financial system.
The brand new foreign money – referred to as Zim Gold (ZiG) – will probably be backed by foreign currency echange, gold and treasured minerals, John Mushayavanhu, the governor of Zimbabwe’s Reserve Financial institution, instructed reporters within the capital Harare on Friday.
Mushayavanhu mentioned the ZiG would flow into alongside a basket of different currencies.
He mentioned the central financial institution would additionally introduce a market-determined trade charge.
“With impact from at this time … banks shall convert the present Zimbabwe greenback balances into the brand new foreign money,” he mentioned.
The transfer is geared toward fostering “simplicity, certainty, [and] predictability” in Zimbabwe’s monetary affairs, he added, presenting the brand new banknotes that are available in eight denominations starting from one to 200 ZiG.
The brand new notes characteristic a drawing of gold ingots being minted, in addition to Zimbabwe’s well-known Balancing Rocks, which already appeared on the outdated ones.
Zimbabweans have 21 days to transform their outdated money into new cash, Mushayavanhu mentioned.
Adequate reserves to again new foreign money?
The Zimbabwean greenback has misplaced nearly one hundred pc of its worth in opposition to the US buck over the previous yr.
On Friday, it was formally buying and selling at about 30,000 in opposition to its extra coveted US counterpart – and at 40,000 on the black market, in response to tracker Zim Worth Verify.
Its poor efficiency has contributed to the Southern African nation’s excessive inflation charge, which after climbing properly into the triple digits final yr, was at 55 % in March, in response to official knowledge.
The present inflation charge has piled stress on the nation’s 16 million people who find themselves already contending with widespread poverty, excessive unemployment and a extreme drought induced by the El Nino climate sample.
Hovering costs have additionally introduced again reminiscences of 2008, when hyperinflation was so uncontrolled that the central financial institution even issued a 100-trillion-dollar observe, which is now a collectors’ merchandise.
Amid these financial challenges, analysts have questioned whether or not Harare has sufficient reserves to adequately again the brand new foreign money, and if the latter might endure from volatility in gold costs.
On Thursday, President Emmerson Mnangagwa inspected the central financial institution’s vaults that Mushayavanhu – who was appointed earlier this yr – mentioned maintain 1.1 tonnes of strong gold.
The financial institution additionally has nearly 1.5 tonnes extra overseas, in addition to $100m in money and treasured minerals – similar to diamonds, that if transformed into gold would account for an additional 0.4 tonnes, Mushayavanhu mentioned.
Altogether, the reserves’ worth totals $285m, which Mushayavanhu highlighted was “greater than thrice cowl for the ZiG foreign money being issued”.
In the meantime, the central financial institution added that it will additionally undertake a decent financial coverage, linking cash provide progress to progress in gold and international trade reserves.