Zimbabwe’s New Currency Faces Challenges Five Months After Launch

Five months after its introduction, Zimbabwe’s new currency, the gold-backed Zimbabwe Gold (ZiG), is facing significant challenges. Increased grain imports are depleting foreign reserves, jeopardizing the government’s plan to establish the ZiG as the sole currency by 2026.
Initially launched at a rate of 13.6 ZiG per U.S. dollar in April, the currency has since lost nearly 80% of its value on the black market. To address rising dollar demand, the central bank recently injected $64 million into the foreign exchange market, following a $50 million injection in July.
Central bank governor John Mushayavanhu noted that there has been a buildup of demand for foreign currency at banks, leading to undue pressure on the foreign exchange market. Despite these efforts, confidence in the ZiG remains low. Independent economist Prosper Chitambara pointed out that the currency’s devaluation reflects a lack of public trust.
However, many market traders remain skeptical. Street vendor Maynard Maketo expressed his reluctance to transact in the ZiG, citing its ongoing devaluation and past experiences with the now-defunct Zimdollar.
According to Pricecheck, the ZiG currently trades between 20 and 26 ZiG to $1 on the black market, while the official rate stands at 13.9 ZiG to $1. Trader Carol Munjoma stated that she only accepts U.S. dollars for her grocery sales, noting that the ZiG would need to stabilize before being widely accepted.
Central bank chief Mushayavanhu has reiterated the commitment to building trust in the new currency, a sentiment echoed by Gwanyanya, who asserted that it’s premature to conclude the ZiG’s fate.