Zimbabwe has introduced a new gold-backed currency in a development the central bank chief said was aimed at stabilising the economy by curtailing inflationary pressures triggered by the free-fall of the local unit in recent months.
Announcing the introduction of the Zimbabwe Gold (ZiG) bank notes and coins on Friday, newly appointed Reserve Bank of Zimbabwe (RBZ) governor John Mushayavanhu said the new currency was being introduced with immediate effect.
Mushayavanhu said the value of the ZiG notes and coins issued and in circulation at any one time would be anchored in and backed or covered by a basket of foreign currency reserves and precious metals (mainly gold) and valuable minerals held and maintained by the central bank in its vaults.
The value of one ZiG on the date of its initial issuance would be equivalent to the value of one milligram of gold of 99 per centum purity as determined by the spot price of gold, and the prevailing interbank foreign exchange rate, he said.
Thereafter it would be determined by the inflation differential between ZiG and the United States dollar inflation rates and the movement in the price of the basket of precious metals and valuable minerals held as reserves by the central bank.
“If we implement these measures, we expect them to have an impact on inflation,” Mushayavanhu said during his maiden monetary policy presentation in Harare.
The ZiG replaces the Zimbabwe dollar or ZWL, a currency that had lost three-quarters of its value so far this year.
The governor said the new currency would come in one, two, five, 10, 50, 100 and 200 ZiG denominations and banks are expected to convert current Zimbabwe dollar balances to the ZiG with immediate effect.
JN/APA