Professor Steve Hanke has ranked Zimbabwe’s ZiG as the second worst currency globally, losing 50% of its value against the US dollar in 10 months. The depreciation is attributed to inflation and lack of trust in the currency. The RBZ aims to stabilize the ZiG, though compliance with official rates is low.
Professor Steve Hanke, a prominent economist and currency expert, has classified Zimbabwe’s ZiG currency as the second worst globally, just behind Venezuela’s Bolivar. His recent evaluation indicates that the ZiG has depreciated by 50% against the US dollar within the past ten months amid rampant inflationary pressures. Venezuela’s Bolivar has suffered a 52% decline, while the Iranian Rial and Ethiopian Birr ranked third and fourth, losing 24% each.
Since its introduction at a rate of US$1 equaling ZiG2.50 last year, the ZiG has significantly devalued, currently trading between ZiG33 and ZiG40 on the black market. This drop in value is attributed to widespread distrust in the so-called ‘gold-backed currency’. In light of Zimbabwe’s informal economy, compliance with the government mandate for businesses to transact at the official rate of US$1: ZiG26 has been minimal.
Hanke’s findings emerge as the Reserve Bank of Zimbabwe (RBZ) asserts its commitment to the stability and success of the ZiG currency. The RBZ has faced criticism for its inability to mandate the use of the ZiG in critical transactions, including fuel purchases and passport fees. Dr. John Mushayavanhu, RBZ governor, remarked during a recent meeting with the Tourism Business Council of Zimbabwe (TBCZ), “There are adequate use case scenarios for ZiG at the moment.”
In summary, the ZiG currency has experienced significant devaluation, ranking as the second worst in the world due to inflation and lack of trust. The official exchange rate is largely ignored in favor of the black market rate. Current efforts by the Reserve Bank of Zimbabwe aim to restore confidence and stabilize the currency, although challenges remain.
Original Source: www.newzimbabwe.com
