Authorities rally behind ZIG
TREASURY and the central bank are closely collaborating to ensure that the recently launched Zimbabwe Gold (ZIG) currency attracts market confidence, it has been revealed.
This comes in the wake of the rapid depreciation of the Zimbabwe dollar unit whose value will be redenominated to the ZIG currency.
The ZIG notes and coins will start circulating on April 30, as the Reserve Bank of Zimbabwe (RBZ) launches a marketing blitz, as well as education and awareness campaign of the new currency.
The market has been reconfiguring its systems in line with the new monetary policy.
Last week, the apex bank launched the new ZIG currency, which authorities claim is backed by adequate amounts of gold and foreign currency reserves that total US$285 million. This is in addition to the US$300 million reserves held by government in private bank accounts.
However, the new currency has unnerved the market, with concern raised on whether the ZIG currency will easily be convertible to other competitive currencies such as the greenback.
Persistence Gwanyanya, a member of the RBZ Monetary Policy Committee, told this publication that the government was focused on restoring confidence in ZIG.
He said this on the sidelines of of the post-2024 Monetary Policy & Outlook Conference held on Tuesday in partnership with the Zimbabwe Independent.
“Treasury is also supporting the demand for currency. That is why we have also said that the Treasury should come in and answer this question to support the demand for the currency, which is essentially underwriting of a currency,” Gwanyanya said.
“Treasury has accepted that. They have confirmed that to me today. They have accepted that.
“As the market starts to see the socalled foreign currency market deliver, I think that alone will rally people behind the market. It will make people believe again, make people hope again.
“So, that is how I think the question of confidence can be tackled. Let us see how it operates for the next three months or six months. Definitely, the functionality of the currency is going to make a huge difference in respect of our country,” he said.
ZIG, Gwanyanya added, was easily convertible to other firm currencies since it was guaranteed by substantial reserves of gold.
“It gives it convertibility. By convertibility I mean you can walk into the bank with your invoice for payment, and that payment is going to be paid,” he said.
“The other aspect, which was a challenge with the previous currencies, is the store of value aspect of it.
“So, the store of value aspect, if it is addressed, is the one that will then make you able to hold ZIG without fear of losing value. How is that addressed?
“The ZIG currency is backed by gold so its price, its exchange rate is also gaining and is actually storing value,” Gwanyanya said.
He said since its launch ZIG has already gained some value.
“It means that your current holdings actually gain value against the US,” Gwanyanya added.
Economist Nigel Chanakira said Zimbabweans were afraid of losing money since they had lost so many assets over the years due to currency instability.
However, he urged citizens to give the central bank ample time to judge the performance of the newly introduced currency.