News / National
Zimbabwe's gold backed currency ZiG plummets by over 75%
27 Sep 2024 at 14:07hrs | Views
The Reserve Bank of Zimbabwe (RBZ) today allowed the Zimbabwe Gold (ZiG) currency to fall by over 74% against the US dollar, following weeks of mounting pressure on the currency introduced in April. According to the central bank's official website, the mid-rate for the ZiG dropped sharply to ZWG24.3902 per US dollar on Friday, down from ZWG13.9987 on Thursday.
This significant depreciation comes after sustained concerns over the stability of the ZiG, which was launched as a gold-backed currency intended to replace the deteriorating RTGS and Bond Notes. Despite the RBZ's initial assurances that the ZiG was backed by 2.5 tonnes of gold and foreign currency reserves, the currency has faced increasing volatility on the market.
The 40% plunge is the largest one-day drop since the introduction of the currency and raises serious concerns about the central bank's ability to stabilize Zimbabwe's financial system. Analysts have pointed to liquidity challenges and continued demand for foreign currency as major drivers of the pressure on the ZiG.
In response to the currency's devaluation, market speculation has grown about further instability in the coming weeks. The move also casts doubt on the government's ability to manage exchange rate policy, as businesses and individuals alike struggle to adapt to the rapidly changing financial landscape.
Economic observers are now looking to see whether the central bank will implement additional measures to shore up confidence in the currency, or whether more volatility is on the horizon. Meanwhile, Zimbabweans continue to bear the brunt of the economic turbulence, as prices for goods and services are expected to rise further in response to the sharp fall of the ZiG.
This significant depreciation comes after sustained concerns over the stability of the ZiG, which was launched as a gold-backed currency intended to replace the deteriorating RTGS and Bond Notes. Despite the RBZ's initial assurances that the ZiG was backed by 2.5 tonnes of gold and foreign currency reserves, the currency has faced increasing volatility on the market.
In response to the currency's devaluation, market speculation has grown about further instability in the coming weeks. The move also casts doubt on the government's ability to manage exchange rate policy, as businesses and individuals alike struggle to adapt to the rapidly changing financial landscape.
Economic observers are now looking to see whether the central bank will implement additional measures to shore up confidence in the currency, or whether more volatility is on the horizon. Meanwhile, Zimbabweans continue to bear the brunt of the economic turbulence, as prices for goods and services are expected to rise further in response to the sharp fall of the ZiG.
Source - byo24news
