‘Increased ZiG use could trigger worldwide acceptance’
Thu July 11 2024
THE widespread usage of the new Zimbabwe Gold (ZiG) currency and its continued stability has the potential to trigger a seamless acceptance of the local unit regionally and globally, Reserve Bank of Zimbabwe (RBZ) Monetary Policy Committee member, Mr Persistence Gwanyanya, has said. The ZiG was introduced in April as part of a raft of policy interventions to address exchange rate volatility, curtail inflation and restore macro-economic stability.
It is backed by precious minerals, mainly gold and foreign currency reserves. Zimbabwe has 2,5 tonnes of gold and US$300 million in cash reserves to back the new currency. Of the gold reserves, 1,5 tonnes are held at the RBZ vaults and one tonne is held offshore. Mr Gwanyanya told Business Chronicle in Bulawayo yesterday that although the monetary authorities’ primary focus was for massive local usage of ZiG, indications point to seamless acceptance regionally and internationally.
“We are more interested and concerned about how it is performing domestically before we talk about regional and international acceptance,” he said.
“When we have a wider acceptance of ZiG domestically, we will then talk about how ZiG is fairing regionally. We have not reached that point but there is hope that we will get there if the traction that we are witnessing continues.
The new currency has already demonstrated solid gripping in the last three months with potential to anchor the economy, further stabilising prices and restoring confidence in the local currency.
The recent International Monetary Fund (IMF) mission acknowledged the stability brought by the ZiG, which has positively affected retail and manufacturing sectors.
Several segments of the business sector are reporting stable prices thereby reducing the need for frequent price adjustments.
According to Zimbabwe National Statistics Agency (ZimStat)’s latest update, the ZiG has made huge strides in taming inflation in the country as the month-on-month inflation rate for June 2024 dropped to negative zone.
This means that prices as measured by the all-items ZiG Consumer Price Index (CPI) remained constant between May and June 2024. Mr Gwanyanya said after a decade of Zimbabwe not having a functional currency, ZiG has renewed hope in the local currency.
“So far we have confidence with the traction on the ground with regards to the performance of ZiG. We have confidence because it appears the tendency of wanting to dispose of ZiG at every opportunity is waning away,” he said.
Source: https://www.chronicle.co.zw/