The RBZ is optimistic about the gold-backed ZiG currency as a viable alternative to the US dollar. Introduced in April 2023, the ZiG aims to combat exchange rate volatility and inflation. The RBZ’s strict monetary policies and the allowance for businesses to set exchange rates are designed to stabilize the currency and move towards a de-dollarized economy by 2030.
The Reserve Bank of Zimbabwe (RBZ) is expressing confidence in the gold-backed Zimbabwe Gold (ZiG) currency, which it sees as a strong alternative to the US dollar for the local economy. During a recent Tourism Business Council of Zimbabwe (TBCZ) event, RBZ Governor John Mushayavanhu defended the ZiG, highlighting that the monetary policies implemented by the bank are aimed at maintaining its stability.
The ZiG was launched in April 2023 to combat persistent exchange rate volatility and inflation in Zimbabwe. Since its introduction, RBZ has employed strict monetary policies, including high-interest rates, to discourage speculative borrowing and stabilize the currency. Mushayavanhu explained that a major goal is to de-dollarize the economy by 2030, focusing on restoring a single-currency system despite the current dominance of the US dollar.
To improve acceptance of the ZiG, the RBZ has allowed businesses to determine their own exchange rates rather than strictly following the official rate. Moreover, the Financial Intelligence Unit (FIU) will not penalize businesses using independent exchange rates if they maintain reasonable pricing margins.
Mushayavanhu revealed that fuel traders are proposing to sell fuel in ZiG to support their local operations, signaling confidence in the currency’s growing acceptance. He assured that maintaining economic stability is a priority, stating, “We do not want to go back to long queues and fuel shortages.”
Looking forward, RBZ Deputy Governor Innocent Matshe indicated that the exchange rate should ideally settle around US$1/ZiG22, which could gradually gain market acceptance. The RBZ remains dedicated to the long-term sustainability of the ZiG while striving for a reduced reliance on the US dollar in the future.
The Reserve Bank of Zimbabwe is focused on the gold-backed ZiG currency as a sustainable alternative to the US dollar. With strict monetary policies in place and modifications allowing businesses flexibility in exchange rates, the RBZ aims to stabilize the local economy. The commitment towards de-dollarization and the potential wider acceptance of the ZiG for transactions, particularly in critical sectors like fuel, underline the central bank’s strategic efforts to restore economic stability.
Original Source: bulawayo24.com
