An Open Letter to Finance Minister Mthuli Ncube

Dear Finance Minister Mthuli Ncube,

As you navigate the complexities of Zimbabwe's economic landscape, a pressing matter deserves your urgent attention: the persistent depreciation of the Zimbabwe Gold (ZiG) currency, despite rising global gold prices. This situation raises critical questions about monetary policy, economic strategy, and the underlying structures that govern our financial systems.

The introduction of the ZiG was heralded as a beacon of hope. Anchoring our currency to gold reserves was intended to provide stability and restore confidence among citizens and investors alike. With global gold prices experiencing an upward trajectory, one would expect the value of the ZiG to reflect this trend. However, the reality paints a different picture, and the depreciation of the ZiG continues to perplex many including a man or woman on the streets of Zimbabwe.

Gold, often seen as a safe-haven asset, has witnessed significant price increases recently. Factors such as inflation, geopolitical tensions and supply chain disruptions have driven investors towards gold, creating a surge in its market value. Just googling online you will see that there is a massive demand for gold. However, the ZiG's value has not mirrored these gains, raising questions about the efficacy of our gold-backed currency system.

One of the primary reasons for the ZiG's depreciation is the lack of confidence among the populace. Currency stability is often rooted in public trust. Despite the gold backing, Zimbabweans have experienced years of hyperinflation and economic instability. This historical context fuels skepticism about the government’s ability to maintain the value of the ZiG, leading many to prefer foreign currencies or even barter systems.

The effectiveness of the monetary policy governing the ZiG has also come under scrutiny. If the currency is to be genuinely gold-backed, the mechanisms for buying, selling and trading should be clear, transparent, and efficient. Any inefficiencies in these processes can lead to market distortions that undermine the currency's value. As it stands, the mechanisms for accessing gold reserves and converting them into liquid assets for everyday transactions remain opaque.

The financial markets are influenced by a myriad of external factors, including speculation and economic conditions both locally and globally. Even with a gold-backed currency, the ZiG is not immune to market forces that can impact its valuation. Speculators may take advantage of perceived weaknesses, further driving down the currency's value. Additionally, external economic pressures, including sanctions and trade restrictions, can adversely affect investor sentiment.

Minister Mthuli Ncube, the situation surrounding the ZiG is critical and swift action is required to address the underlying issues. The rising global gold prices should be a boon for our economy, yet the current trajectory of the ZiG suggests otherwise.

The Zimbabwean people are looking for leadership and solutions that will not only stabilise the currency but also pave the way for sustainable economic growth.

Is the ZiG really anchoured with gold, if that is the case can you honestly tell the me why it is depreciating yet gold prices are going up.

Regards

Engineer Jacob Kudzayi Mutisi