Top Price Market
  • Business
  • Politics
  • Investing
  • World
  • Business
  • Politics
  • Investing
  • World

Top Price Market

Investing

Zimbabwe Shifts to Gold-backed Currency, Replacing Devalued Dollar

by April 10, 2024
April 10, 2024
Zimbabwe Shifts to Gold-backed Currency, Replacing Devalued Dollar

Zimbabwe is attempting to stabilize its economy and restore confidence in its monetary system by switching to a gold-backed currency. The new currency, called Zimbabwe Gold (ZiG), is the country’s latest response to its long line of financial crises, which have led to the almost total devaluation of the Zimbabwean dollar.

“We want a solid and stable national currency — it does not help to print money,” said John Mushayavanhu, governor of Zimbabwe’s central bank. Mushayavanhu, who was recently appointed to his post, announced that the initial valuation of the new currency will be set at 13.56 ZiGs per US$1, with subsequent rates to be determined by market forces.

All existing bank accounts denominated in Zimbabwean dollars will be converted into an equivalent amount of ZiGs.

Just this year, the five year old reissued Zimbabwean dollar has plummeted to lose around three-fourths of its value.

According to the central bank, the most recent exchange rate saw the Zimbabwean dollar trading at over 30,674 units against the US dollar. In 2019, when the currency was reintroduced, US$1 equated to 2.50 Zimbabwean dollars.

The Zimbabwean dollar’s turbulent history

The drastic devaluation of the Zimbabwean dollar can be attributed to its tumultuous history.

Initially introduced in 1980, the Zimbabwean dollar rapidly lost its value amid economic instability, becoming one of the least valuable currencies globally. From 1980 to 2022, Zimbabwe experienced a massive average annual inflation rate of 672.5 percent, leading to astronomical price increases in the country.

The currency underwent multiple redenominations in 2006, 2008 and 2009, but each failed to curb hyperinflation. The country’s decision to redistribute land in 2000 further disrupted agricultural production, worsening the situation.

Despite efforts to stabilize the economy, hyperinflation persisted until foreign currencies replaced the Zimbabwean dollar as the primary medium of exchange. Many Zimbabweans have also resorted to a practice known as ‘mattress banking’ — keeping money out of banks and within their homes.

Analysts have doubts that Zimbabwe’s recent efforts will help. Masimba Manyanya, a former chief economist in the finance ministry, said that the lack of currency stability in the country may pose a problem.

“We’ve had five currencies over the past 10 years. It reflects confusion within the government itself,” Manyanya said.

Economist Godfrey Kanyenze echoed this same sentiment with the BBC: ‘We now end up in the same place where we started — where assurances are being given to the market that the government will live within its means.”

He added, ‘The political culture has not changed — the critical point is discipline on the part of the authorities.’

Prosper Chitambara, senior economist at the Labor and Economic Development Research Institute of Zimbabwe, lauded the decision as he emphasized the benefits of linking the currency to a tangible asset like gold.

However, he also stressed the importance of fiscal responsibility in conjunction with the currency change.

“We need to ensure fiscal sustainability through ensuring there is fiscal discipline, fiscal consolidation, restructuring public spending with a view of eliminating waste and nonproductive spending,” he told Voices of Africa in February.

Steven Dhlamini, an economics professor at the National University of Science and Technology in Zimbabwe, said that regaining public trust will be crucial to the success of the new currency.

‘The success of the change will hinge on whether people have confidence in the gold-backed currency,” he said. “So once the trust is established, then that is critical in ensuring the currency will be acceptable and will be stable.”

Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.

This post appeared first on investingnews.com
0
FacebookTwitterGoogle +Pinterest
previous post
Operational and Financial Update
next post
Economic uncertainty reigns as the grip of inflation persists

You may also like

Top Defense Contractors by Market Cap (Updated 2023)

Positive Start to Dilling at Lo Herma ISR...

Forum Energy Metals and Global Uranium Announce the...

Successful Placement to Raise $750,000

Rio Tinto Shares Initial Resources and Ore Reserves...

Roblox CorporationShareholders May Have Been Affected by Fraud...

R3D Secures Additional Funding

Helium Stocks: 5 Biggest Canadian Companies in 2023

Toro to Refresh Lake Maitland Uranium Scoping Study

Crypto Market Buzzing on Rumor Trump Will Announce...

    Get free access to all of the retirement secrets and income strategies from our experts! or Join The Exclusive Subscription Today And Get the Premium Articles Acess for Free


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Latest

    • Metals and Mining Virtual Investor Conference: Presentations Now Available for Online Viewing

    • Vance says India-Pakistan conflict ‘none of our business’ as Trump offers US help

    • Trump pushes tax hikes for wealthy as ‘big, beautiful bill’ deadline looms

    • US and other allies of Ukraine pile pressure on Putin, threatening fresh sanctions if he refuses 30-day truce

    • OpenAI’s Sam Altman thanks Sen John Fetterman for ‘normalizing hoodies’

    Categories

    • Business (1,632)
    • Investing (4,782)
    • Politics (7,552)
    • Uncategorized (2)
    • World (6,137)
    • About us
    • Contacts
    • Privacy Policy
    • Terms & Conditions
    • Email Whitelisting

    Disclaimer: toppricemarket.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 toppricemarket.com | All Rights Reserved


    Back To Top