Zimbabwe’s new currency is a step toward eventually abandoning the use of US dollars in the economy, Vice President Constantino Chiwenga said.
The ZiG was introduced on April 5 to replace the Zimbabwean dollar, after its frequent and rapid depreciation led the greenback last year to become the preferred currency for transacting. The US dollar is used in more than 80% of transactions in the southern African country.
“ZiG is there to stay forever,” said Chiwenga. “This bold step symbolizes government’s unwavering commitment to the de-dollarization program premised on fiscal discipline, monetary prudence and economic revitalization.”
The ZiG, short for Zimbabwe Gold, is backed by a basket of precious metals including about 2.5 tons of gold along with $100 million of foreign currency reserves held by the central bank. The currency has gained more than 2% against the dollar since its debut, data posted on the central bank’s website shows.
The authorities plan to increase their gold reserves by monitoring the industry to curb smuggling of the metal, Chiwenga said. Zimbabwe has compelled mining companies since the end of 2022 to pay part of their royalties using the metal to build its reserves.
“We are going to put strict measures that can see heads rolling,” he said. “Every gram must be accounted for of our gold.”
The ZiG’s link to gold lessens the risk of volatility and manipulation, and the authorities expect it to provide stability in the currency markets and to wipe out premiums on the parallel market on the streets of Zimbabwe’s cities, said Chiwenga.
In order to prevent volatility in the currency, the authorities will take action against street market dealers and businesses involved in pushing up prices in supermarkets for speculative reasons, Chiwenga said.
“Speculators should cease,” he said. “Behave, or you get shut down or we lock you up.”