Zimbabwe to Introduce New Zimbabwe Currency Linked to Foreign Exchange, Gold

FRIDAY APRIL 05 2024

A man poses with a handful of Zimbabwean dollars at a bank in Harare, Zimbabwe on June 15, 2015.

 Zimbabwe will introduce a new "structured currency" linked to foreign currencies and gold that it expects to provide more stability than its weakening dollar and help rein in inflation, its central bank Governor John Mushayavanhu said on Friday.

As the Zimbabwean dollar tumbled this year from under 6,000 to above 29,000 to the US dollar, annual inflation soared beyond 55 percent in March, evoking bitter memories of hyperinflation under former leader Robert Mugabe.

The new currency - called Zim Gold (ZiG) - will be backed by foreign currencies, gold and precious minerals, Mushayavanhu told a press conference in capital Harare, adding that it would circulate alongside a basket of other currencies.

He said the central bank would also introduce a market-determined exchange rate.

"If we implement these measures we expect them to have an impact on inflation," Mushayavanhu said.

The central bank also set its main interest rate at 20 percent, which it said was a re-calibrated rate, a drastic cut from the previous rate of 130 percent.

Finance Minister Mthuli Ncube said in February that authorities were considering linking the exchange rate to hard assets such as gold and creating a currency board.

The announcement is the culmination of months of deliberations between the central bank and finance ministry about how to arrest inflation and stabilise the Zimbabwean dollar.