The Reserve Bank of Zimbabwe is optimistic about the potential of the gold-backed Zimbabwe Gold (ZiG) currency, emphasizing its competitive stance against major currencies like the US dollar. RBZ Governor John Mushayavanhu shared measures in place that reinforce economic stability and pricing freedom in the market. The ultimate aim is to de-dollarize the economy by 2030, with realistic exchange rates expected to emerge following market acceptance.
The Reserve Bank of Zimbabwe (RBZ) remains optimistic regarding the gold-backed Zimbabwe Gold (ZiG) currency’s ability to compete with major currencies, including the United States dollar. During a recent Tourism Business Council of Zimbabwe (TBCZ) event, RBZ Governor John Mushayavanhu defended the ZiG, highlighting robust monetary measures designed to maintain its strength against the USD. He expressed confidence in the ZiG’s stability, noting, “The ZiG to USD rate is firming up,” which symbolizes public trust in the currency.
Introduced in April last year, the ZiG currency emerged to combat issues of exchange rate volatility and rampant inflation. The RBZ has implemented a strict monetary policy, backed by high-interest rates, to prevent speculative financing. Governor Mushayavanhu asserted that stabilizing the ZiG is crucial, aiming to establish it as the central economic currency moving towards the 2030 goal of de-dollarization.
Officials, business leaders, and economists agree that reliance on the US dollar is unsustainable due to its strong influence, which hinders local goods’ competitiveness globally. The limited availability of US dollars also restricts the RBZ’s capability to adjust monetary policies effectively in the Zimbabwean economy.
To encourage the confidence in the ZiG, RBZ has permitted economic agents the flexibility to set prices independent of the official exchange rate. Governor Mushayavanhu stated, “The market is free to price their goods and services at whatever USD to ZiG rate they prefer.” This liberal pricing approach allows businesses to adopt rates that mirror market realities.
Furthermore, the RBZ aims to deter manipulation of exchange rates by economic agents who do not adhere to sustainable pricing models. The governor indicated that several fuel traders have approached the bank to transact in ZiG, a move expected to heighten local currency transactions without reverting to fuel shortages. He affirmed, “We do not want to go back to long queues and fuel shortages,” signifying a commitment to policies that promote economic stability.
Additionally, the RBZ Deputy Governor Innocent Matshe articulated that a realistic exchange rate should approximate US$1/ZiG22, a level they foresee being accepted by the market.
In conclusion, the Reserve Bank of Zimbabwe is firmly committed to the stability and success of the gold-backed Zimbabwe Gold (ZiG) currency. By implementing stringent monetary policies and allowing market-driven pricing, the central bank aims to foster confidence in the local currency. The ultimate goal remains to shift away from dependence on the US dollar, establishing the ZiG as the cornerstone of the economy by 2030. Through these measures, the RBZ looks to secure foreign exchange stability and support the local economy’s renewal.
Original Source: www.newzimbabwe.com
