The southern African country dumped the Zimdollar earlier this month after it lost more than 70% of its value against the U.S. dollar
Zimbabwe’s new gold-backed currency came into general circulation on Tuesday amid promises by monetary authorities to keep the money supply in check as they struggle to contain inflation.
The southern African country dumped the Zimdollar earlier this month after it lost more than 70% of its value against the U.S. dollar.
The new currency, the Zimbabwe Gold (ZiG), is backed by gold, other precious minerals and the U.S. dollar. It was trading on Tuesday at 13.4 to the dollar, little changed from previous levels on the formal market.
Long queues formed outside banks and at Automated Teller Machines (ATMs) while others used the new currency to buy goods in supermarkets.
While some Zimbabweans have expressed mistrust over the new currency, others such as Melda Mudavanhu, a 50-year-old civil servant, remain optimistic.
“If we support the currency, since it’s the first one of its kind, this currency will succeed. Getting rid of the money changers is also welcome because they were a menace,” Mudavanhu said.
Ahead of the ZiG’s introduction, authorities moved to arrest illegal foreign currency dealers, accusing them of charging a premium on the ZiG against the greenback.
The Reserve Bank of Zimbabwe on Monday set ZiG 3,000 as a daily withdrawal limit for individuals as it tries to contain the money supply.
A total of ZiG 80 million is currently on the market, according to the central bank.
The central bank’s Monetary Policy Committee pledged on Monday to support a tight monetary policy stance.
The ZiG, Zimbabwe’s fourth attempt at currency reform in a decade, has remained stable on the formal market since its introduction.
Source: Zawya
