On April 8, 2024, Zimbabwe formally introduced its new gold-backed currency named ZiG (Zimbabwe Gold). As reported by Kitco News on April 5, this move marks a crucial milestone in creating a strong and consistent national currency and tackling the country’s economic volatility and high inflation rates.
On April 5, 2024, the Reserve Bank of Zimbabwe (RBZ) introduced a new currency, according to Kitco’s reports. The RBZ explained that this currency would be supported by gold and a combination of foreign currencies. This action follows the significant drop in value of the current Zimbabwean dollar relative to the U.S. dollar, making it the second poorest performing currency against the greenback in 2024.
Central Bank Governor John Mushayavanhu, who began his tenure on March 28, 2024, underscored the importance of traditional monetary policies and pledged that under his leadership, there would be no more money printing. Notably, Zimbabwe has introduced its sixth new currency, the ZiG, since 2008.
Based on Kitco’s article report, the RBZ presently stores 2.5 tonnes of gold and $100 million in cash. According to President Emmerson Mnangagwa, our country possesses enough gold reserves to support the new currency. The central bank further disclosed that the combined value of our gold and cash reserves, amounting to $285 million, exceeds three times the backing required for the Zimbabwean Dollar (ZiG) being introduced.
Kitco pointed out that Zimbabwe’s decision to introduce a gold-backed currency is part of the country’s strategy to address its severe inflation issue. In May 2023, the central bank introduced a digital token backed by gold, while in July 2022, reports suggest that Zimbabwe started selling gold coins.
Analysts, including Ole Hansen, the Head of Commodity Strategy at Saxo Bank, have expressed shifting views on gold-backed currencies. Ole acknowledged that the increased rate at which central banks are purchasing gold hints that the concept of gold-backed currencies may not be dismissed outright.
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2024-04-08 19:34