Photo: Screenshot, Bloomberg News
Zimbabwe has launched a new gold-backed currency called ZiG (Zimbabwe Gold) to stabilize its economy after years of crisis and hyperinflation. Introducing this new currency follows a series of economic challenges and aims to address the country’s ongoing inflation issues.
Hyperinflation refers to an extreme economic condition characterized by rapid, excessive, and uncontrollable increases in general price levels within an economy, according to Investopedia. While standard inflation tracks the gradual rise in prices of goods and services, hyperinflation represents accelerated and inflation, often exceeding 50 percent per month.
Although hyperinflation is uncommon in developed economies, it has historically occurred in various countries such as China, Germany, Russia, Hungary, and Georgia. These instances of hyperinflation are marked by staggering price hikes that severely erode the purchasing power of a nation’s currency, leading to economic instability and hardship for its citizens.
Central Bank governor John Mushayavanhu unveiled the ZiG currency, highlighting its structure and market-determined exchange rate. The ZiG replaces the RTGS dollar, which had experienced significant devaluation throughout the year, Al Jazeera reported.
To facilitate the transition, Zimbabweans have 21 days to exchange their old, inflation-affected notes for the new ZiG currency. Despite this change, the U.S. dollar will remain legal tender for transactions, reflecting the continued preference for foreign currency in everyday transactions.
The new ZiG banknotes are available in denominations ranging from 1 to 200, and coins will also be introduced to address the shortage of U.S. coins in circulation, BBC News reported.
Mushayavanhu emphasized that the new currency will be backed by equivalent value in precious minerals, primarily gold, or foreign exchange reserves to prevent rapid devaluation. This measure aims to restore confidence in the local currency, which has faced historical mistrust following past economic crises.
Photo: Screenshot, Bloomberg News, https://www.bloomberg.com/news/articles/2024-04-09/zimbabwe-s-new-zig-currency-strengthens-on-second-day-of-trading?sref=ruqU2M2M
