Zimbabwe launched a new currency that is backed by hard assets, including gold. Will it be widely considered collapsed due to hyper-inflation or will it maintain its value by 2030?
1,000Zimbabwe launches new gold-backed currency - ZiG
Unveiling the new notes, central bank governor John Mushayavanhu said the ZiG would be structured, and set at a market-determined exchange rate. The ZiG replaces a Zimbabwean dollar, the RTGS, that had lost three-quarters of its value so far this year.
Annual inflation in March reached 55% - a seven-month high. Zimbabweans have 21 days to exchange old, inflation-hit notes for the new currency. However, the US dollar, which accounts for 85% of transactions, will remain legal tender and most people are likely to continue to prefer this. The new ZiG banknotes come in denominations of between 1 and 200. Coins will also be introduced to overcome the shortage of US coins, which has seen people receive change in sweets, small chocolates and pens. Mr Mushayavanhu said the new currency was being rolled out with immediate effect and banks must convert current Zimbabwe dollar balances to the ZiG.
Zimbabwe introduces new currency as depreciation and rising inflation stoke economic turmoil
Since January, the Zimbabwe dollar lost over 70% of its value on the official market, and was plunging even further on the thriving but illegal black market.
Friday’s announcement is the latest of a cocktail of currency measures undertaken by the Zimbabwean government since the initial spectacular collapse of the Zimbabwe dollar in 2009. The period saw the country at one point issuing a 100 trillion Zimbabwe dollar banknote before the government was forced to temporarily scrap its currency and allow the U.S. dollar to be used as legal tender.
The country re-introduced a domestic note in 2016, marking the beginning of another round of currency volatility highlighted by changes to currency policy that included the banning of foreign currencies such as the U.S dollar for domestic transactions in 2019. This was followed by the unbanning of the greenback a while later after few ordinary people took heed to the U.S dollar ban and the black market thrived, while the local currency quickly depreciated.