The Reserve Bank of Zimbabwe is optimistic about the ZiG currency, introduced to stabilize the economy and reduce reliance on the US dollar. RBZ has implemented strict monetary policies to support the ZiG and aims for a mono-currency system by 2030. By allowing businesses to set their own exchange rates, the bank seeks to enhance market acceptance of the ZiG.
The Reserve Bank of Zimbabwe (RBZ) expresses confidence in the gold-backed Zimbabwe Gold (ZiG) currency as a viable alternative to the United States dollar. During a recent meeting of the Tourism Business Council of Zimbabwe (TBCZ), RBZ Governor John Mushayavanhu asserted that the central bank’s monetary policy measures are stabilizing the ZiG. He indicated a positive trend in the ZiG to USD exchange rate, highlighting that enhancing trust in the local currency is the bank’s principal goal.
Introduced in April 2023, the ZiG aims to combat Zimbabwe’s enduring exchange rate volatility and inflation issues. To achieve this, the RBZ has adopted stringent monetary policies, including elevated interest rates, to mitigate speculative borrowing and reinforce currency stability. Governor Mushayavanhu articulated a long-term objective of fully de-dollarizing the economy and reinstating a mono-currency system by 2030, acknowledging the US dollar’s current dominance while recognizing its unsustainable effects on local industries.
To promote broader acceptance of the ZiG in the market, the RBZ has permitted businesses to establish their own exchange rates, moving away from strict adherence to the official rate. The Financial Intelligence Unit (FIU) will not impose penalties on businesses utilizing independent exchange rates, provided their pricing remains reasonable. Additionally, Mushayavanhu noted interest from some fuel traders willing to conduct transactions in ZiG to support local operations, indicating a potential shift in market practices.
In light of these developments, RBZ Deputy Governor Innocent Matshe predicted that a practical exchange rate based on economic fundamentals should ideally be around US$1 to ZiG22, a target believed to gain gradual market acceptance. The RBZ is committed to the durability of the ZiG and aims to minimize reliance on the US dollar as Zimbabwe transitions its currency system.
The Reserve Bank of Zimbabwe remains optimistic about the gold-backed ZiG, positioning it as an effective alternative to the US dollar. With strict monetary policies and a clear focus on de-dollarization by 2030, the RBZ seeks to enhance the currency’s stability and acceptance. Continuous dialogue with businesses and a flexible approach to exchange rates are part of the central bank’s strategy to bolster confidence in the local currency while navigating economic challenges.
Original Source: bulawayo24.com
