Zimbabwe’s central bank has devalued its gold-backed currency, the Zig, by over 40% against the US dollar, raising concerns about the country’s ongoing economic challenges. The Reserve Bank of Zimbabwe (RBZ) reduced the exchange rate to 24 Zig per US dollar due to increased demand for the US currency, which also serves as legal tender in the southern African country. The decision follows warnings from major retailers about potential store closures if the rate remained unchanged. Introduced just over six months ago, the Zig was meant to stabilize Zimbabwe’s economy. However, it has struggled, particularly in the black market, where its value has more than halved. The RBZ stated that the devaluation aims to address exchange rate risks, control inflation expectations, and stabilize prices. Zimbabweans, however, remain skeptical of the central bank due to past economic mismanagement, especially the hyperinflation crisis of 2008.
SOURCE: BBC