Zimbabwe ZiGs and zags, so the Zim dollar is no more

[Nat Quinn]

Zimbabwe ZiGs and zags, so the Zim dollar is no more

Zimbabwe is replacing the Zim dollar with a new unit called the ZiG, which is backed by a basket of foreign currency and gold.

Central Bank Governor John Mushayavanhu told a press conference on Friday, that the ZiG — short for Zimbabwe Gold — would be launched on April 8 at 13.56 per dollar and a new interest rate set at 20%.

That compares with the 130% on the old unit, the highest central bank rate in the world.

We’ want a solid and stable national currency in this country’, he said.  It’ does not help to print money. Certainly under my watch, it is not going to happen’.

This is Zimbabwe’s sixth attempt to have a functional local currency since 2008, when inflation crossed 500 billion percent rendering it worthless.

Zimbabwe will make it mandatory for companies to settle at least 50% of their tax obligations via the new unit.

The Zimbabwean dollar has lost four-fifths of its value since the start of the year, making it the world’s second worst-performing currency.

This has led to more than 80% of transactions being done in dollars, and inflation rising to 55.3% in March from 47.6% the previous month.

The currency changes are expected to cool annual inflation to between 2% and 5% by year-end and monthly to below 1%.

Mushayavanhu, who took over as central bank governor on 28 March pledged a return to more orthodox monetary policies.

The ZiG will be fully backed by a combination of gold, other precious metals, plus foreign currency reserves.

Gold and cash reserve holdings of US$285 million represent more than three times cover for the ZiG currency being issued.

 

source:Zimbabwe ZiGs and zags, so the Zim dollar is no more – Daily Friend

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