Harare Unveils New Gold Backed Currency

Zimbabwe, in its latest bid to end the serial slide of the local dollar, has replaced it with a new unit called the ZiG backed by a basket of foreign currency and gold. Central Bank Governor John Mushayavanhu told a press conference in Harare, the capital, on Friday, that the ZiG — short for Zimbabwe Gold — would be launched on April 8 at an introductory level of 13.56 per dollar and a new interest rate set at 20%. The ZiG replaces a Zimbabwean dollar, the RTGS, that had lost three-quarters of its value so far this year. Annual inflation in March reached 55% – a seven-month high. Zimbabweans have 21 days to exchange old, inflation-hit notes for the new currency. However, the US dollar, which accounts for 85% of transactions, will remain legal tender and most people are likely to continue to prefer this. Zimbabweans have a historic mistrust of the central bank, dating back to 2008, when it was printing Z$10tn notes while inflation had run out of control. It then abolished its own currency and for many years only used foreign banknotes such as the US dollar and the South African rand.

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