ZiG Now Accounts For 30% Of Transactions - Mushayavanhu
Reserve Bank of Zimbabwe (RBZ) Governor John Mushayavanhu has said the newly introduced ZiG currency now accounts for approximately 30% of all transactions in the economy, up from 20% at the time of its introduction in April 2024.
When the ZiG was first introduced on April 5, 2024, the central bank estimated that between 80 and 85% of all transactions in the economy were settled using US dollars, with the remaining balance in the former Zimbabwean dollar, which was replaced by the ZiG.
Last week, the central bank announced it was injecting US$50 million into the interbank market to stabilise the exchange rates.
In an interview with The Sunday Mail, Mushayavanhu explained that the release of foreign currency into the market was prompted by a rise in liquidity, rather than an increased demand for US dollars. Said Mushayavanhu:
There was no upsurge in demand for foreign currency. Rather, there was a shift in the product pricing ratio, with the ZiG now accounting for 30 per cent of all transactions, up from the initial ratio of 80:20 in favour of the US dollar.
Economist and member of the RBZ Monetary Policy Committee Persistence Gwanyanya said:
There has been an increase of ZiG circulation in the economy and this has resulted in some pressures in the market.
However, this is not a negative issue; it is a good problem to have.
It shows that there is an increasing circulation of the structured currency in the economy.
We were worried when 80 per cent plus of transactions were being done in US dollars. Although it gives some form of stability, it is against what we want, which is effectively de-dollarisation.
So, when the economy is de-dollarised, the challenge related to the convertibility of ZiG is transferred to those that use US dollars for importation.
Naturally, there will be pressure on the US dollar and if it is not managed, there will be escalated volatility.
We cannot avoid this pressure because it is indicative of the trajectory we are taking of de-dollarisation, but we should not spin the market, which is exactly what we did by injecting US$50 million.
Early this month, President Emmerson Mnangagwa hinted that ZiG would become the sole legal tender before the previously announced 2030 deadline to phase out the current multicurrency system.
Speaking in Mutare during the commissioning of a new fruit juice and water processing plant on 04 July, Mnangagwa said ZiG may become the sole currency as early as 2026.
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