How Mushayavanhu just removed
HARARE — Reserve Bank of Zimbabwe governor John Mushayavanhu has issued his maiden monetary policy statement, bringing with him a new gold-backed currency and promises to end the money-printing that tanked the Zimdollar.
In his speech, Mushayavanhu talked tough, saying quasi-fiscal activities “were in the past”. Repeatedly, Mushayavanhu said “not under my watch” would the mistakes of the past happen.
He added: “I don’t believe in quasi-fiscal activities. It’s not going to happen under my watch. My mandate, as spelled out in the RBZ Act, is very clear. I have no intention, whatsoever, to do other people’s jobs. I’ll do my job.”
Cutting through all the jargon, the new man at RBZ has simply used a roundabout way to do what a predecessor did before – dropping some zeroes from the inflation-hit Zimbabwe dollar.
Here, we piece together some of the highlights from his Friday speech.
The currency
Mushayavanhu says the Zimdollar
has been weakened by a lack of confidence and uncertainty.
His solution is what he calls a “market-determined foreign exchange management system which links the local currency to a composite basket of reserve assets comprising precious minerals (mainly gold) and foreign currency balances”.
In short, a currency backed by gold and forex. The ZiG is in denominations of up to 200, and even has half-ZiG and a quarter on the way.
At what rate?
The new currency’s exchange rate has been determined by dividing the official rate with today’s gold price. At today’s rates, that means the ZiG is about 13.56 to the USD.
So, if you were strutting about with Z$1 million in your account, it is now about 445 ZiG.
Effectively, RBZ has lopped off some zeroes from the currency.
RBZ says all Zimdollar prices in the shops must now be converted to the new ZiG.
Mobile operators, such as money transfer services, have until to