Five months after its introduction, Zimbabwe’s new currency, the ZiG, is encountering significant challenges. The gold-backed ZiG, launched in April at a rate of 13.6 ZiG per U.S. dollar is now facing severe devaluation, having lost nearly 80% of its value on the black market. This currency is Zimbabwe’s sixth attempt at establishing a stable monetary system in the past 15 years.
The devaluation of the ZiG is largely attributed to a lack of public confidence, compounded by rising grain imports, which are depleting the country’s foreign reserves. This economic strain jeopardizes the government’s ambitious plan to make the ZiG the only legal currency by 2026.
Economists have noted that the slow adoption of the ZiG reflects broader skepticism and resistance among the population. Despite these challenges, the Reserve Bank of Zimbabwe’s Monetary Policy Committee remains optimistic. They suggest that increasing the currency’s use through local taxation and boosting foreign currency reserves could stabilize the ZiG.
Market traders are less hopeful. Many have expressed doubts about the ZiG’s reliability, drawing parallels to previous failed currency attempts, such as the Zimdollar. The ZiG’s instability has led businesses, like Harare-based grocery trader Carol Munjoma, to continue transactions exclusively in U.S. dollars.
Current exchange rates show the ZiG trading at 20 to 26 ZiG per $1 on the black market, while the official rate is 13.9 ZiG per $1. Despite the challenges, officials remain committed to efforts aimed at building trust in the ZiG, emphasizing that it is too early to determine the currency’s long-term success or failure.
