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Zimbabwe Starts Circulating New Gold-Backed Currency

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Tuesday saw the introduction of Zimbabwe’s new gold-backed currency into circulation, accompanied by assurances from the country’s monetary authorities to control the money supply as they fight to control inflation.

After the Zimdollar lost more than 70% of its value in relation to the US dollar earlier this month, the nation in southern Africa ditched the currency. Zimbabwe Gold (ZiG), the country’s new currency, is backed by gold, other valuable minerals, and US dollars. On Tuesday, it was trading at 13.4 to the US dollar, not much different from earlier levels on the official market.

While some people utilized the new currency to purchase groceries, long lines developed outside banks and at automated teller machines (ATMs). While some Zimbabweans, like Melda Mudavanhu, have voiced skepticism regarding the new currency, others remained hopeful.

“If we support the currency, since it’s the first one of its kind, this currency will succeed. Getting rid of the money changers is also welcome because they were a menace,” Mudavanhu said.

Authorities moved to apprehend illicit foreign currency dealers prior to the introduction of the ZiG, alleging that they were selling the currency at a premium over the US dollar.

In an effort to control the money supply, the Reserve Bank of Zimbabwe established a daily withdrawal restriction of ZiG 3,000 for individuals on Monday.

The central bank claims that there are currently ZiG 80 million available on the market. The Monetary Policy Committee of the central bank promised on Monday to back strict monetary policy.

Since its introduction, the ZiG—Zimbabwe’s fourth effort at currency reform in ten years—has stayed steady on the official market.

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