Zimbabwe Introduces New Gold-Backed Currency to Combat Inflation

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In a bid to address soaring inflation and stabilize its struggling economy, Zimbabwe's Central Bank has introduced a new "structured currency" backed by gold. The currency, named ZiG (Zimbabwe Gold), aims to replace the depreciating Zimbabwean dollar, which has seen a significant decline in value over the past year, leading to skyrocketing inflation.

Announcing the initiative, Reserve Bank governor John Mushayavanhu stated that banks would begin converting existing Zimbabwe dollar balances into the new currency immediately. The ZiG is designed to be "fully anchored and fully backed" by a combination of foreign currency reserves and precious metals, predominantly gold.

The introduction of ZiG is intended to bring simplicity, certainty, and predictability to Zimbabwe's financial landscape. The new banknotes will be issued in seven denominations ranging from 1 to 200 ZiG.

Over the past year, the Zimbabwean dollar has experienced a staggering depreciation of almost 100 percent against the US dollar, officially trading at around 30,000 to 1 USD, and even higher at 40,000 on the black market. This depreciation has exacerbated the country's already high inflation rate, which reached 55 percent in March, according to official data.

The economic challenges faced by Zimbabweans have been further compounded by widespread poverty, high unemployment rates, and a severe drought induced by the El Nino weather pattern, placing immense pressure on the country's 16 million inhabitants.


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