The central bank of Zimbabwe announced on Friday that the country is replacing its crumbling local currency with a new one that is backed by gold and international currencies in the hopes that it will be more stable and aid in reducing inflation.
After a decade of dollarization, the nation in Southern Africa reintroduced its own currency in 2019, but it failed to gain public acceptance, and today over 80% of domestic transactions are made in foreign currencies.
The Zimbabwean dollar has declined by more than 70% since early 2024, pushing price increases to surpass 55% in annual terms in March and bringing back painful memories of hyperinflation during the reign of former leader Robert Mugabe.
Zimbabwe Gold (ZiG), the new currency, would be used in circulation alongside other currencies, according to central bank governor John Mushayavanhu.
The central bank also announced that it was “recalibrating” its primary interest rate, slashing it sharply from 130% to 20% without providing any further details.
The Reserve Bank of Zimbabwe indicated in a monetary policy statement that the opening exchange rate for the new currency would be decided by the London PM Fix price of gold on April 4 and the closing interbank exchange rate on April 5.
The new currency would be “anchored by a composite basket of foreign currency and precious metals (mainly gold) held as reserves for this purpose by the Reserve Bank,” according to the bank, which described it as “structured.”
