President Emmerson Mnangagwa has said the adoption of the Zimbabwe Gold (ZiG) in April 2024 was a significant move towards stabilising the domestic currency.
The Zimbabwe Gold currency was launched on April 8, replacing the Zimbabwean dollar, which had depreciated by 80% in the first three months of 2024.
During the opening of the Second Session of the 10th Parliament at the Parliament Building in Mt Hampden this Wednesday, Mnangagwa said that the Reserve Bank of Zimbabwe has introduced greater flexibility in the willing-buyer willing-seller arrangement to encourage foreign currency holders to engage in the forex market. He said:
Currency stabilisation is at the core of macroeconomic stability. The adoption of the Zimbabwe Gold (ZiG) in April 2024, was an important step towards stabilising the domestic currency anchored by our gold and precious metal reserves. It remains the duty of all of us to respect and abide by measures and instruments intended to maintain economic stability and tame inflation.
In response to the increased foreign currency pressures, and in a bid to deepen the foreign exchange market, the Reserve Bank allowed for greater flexibility under the willing-buyer willing-seller arrangement.
The increased flexibility on the foreign exchange market is expected to further promote effective price discovery and encourage holders of foreign exchange to participate in the willing-buyer willing-seller market.
Mnangagwa also said the government is committed to supporting the currency by allocating 50% of royalties to build reserves.
The President disclosed that foreign currency inflows from exports have risen from US$7 billion in 2023 to US$8 billion in 2024. He added:
Our country’s banking sector is on sounding footing, with sufficient capital and liquidity buffers, while profitability, asset quality and liquidity matrix have also remained stable.
However, we note with concern the resurgence of parallel market activities driven by speculative tendencies.
Corrective measures are being instituted to protect all Zimbabweans from economic disruptions.
Launched in April 2024 at an initial rate of ZiG13.50 to US$1, the ZiG was initially presented as a remedy for Zimbabwe’s ongoing economic crisis. However, it has experienced significant devaluation on the black market.
On September 27, the RBZ set the official exchange rate at ZiG24.3 per US$1, up from ZiG14.1 per US$1.
As of October 2, 2024, the official ZiG rate against the US dollar was ZiG25.2 per US$1, according to the central bank’s website.
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