Zimbabwe said to devalue gold-backed ZiG 44% against dollar

The ZiG, backed by the nation’s gold and hard-currency reserves, was adopted in early April, replacing the Zimbabwean dollar, which had lost 80% of its value since the start of the year.

Zimbabwe sold its gold-backed currency to banks at 44% less than the prevailing rate against the dollar Friday, according to four treasury dealers, effectively devaluing the unit.

Bankers Association of Zimbabwe President Lawrence Nyazema separately confirmed that the official exchange rate had moved to 25 per dollar from 14. “We are expecting a statement before end of day,” he said.

The Reserve Bank of Zimbabwe did not immediately respond to requests for comment. It is scheduled to release its latest monetary policy committee decision later on Friday.

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The move followed persistent weakness in the unofficial market for the ZiG, short for Zimbabwe Gold, amid deep skepticism that the southern African nation’s sixth attempt since 2009 to create a viable local unit would succeed.

The ZiG, backed by the nation’s gold and hard-currency reserves, was adopted in early April, replacing the Zimbabwean dollar, which had lost 80% of its value since the start of the year.

Central bank Governor John Mushayavanhu promised at the time that the lessons from past failures had been learned and the authorities would not print money to finance government borrowing.

Analysts have warned that the new currency would battle to find stability until underlying current-account and fiscal pressures are fixed, in a nation starved of foreign currency inflows which has lacked access to international capital markets since 1999 after defaulting on its debts.

© 2024 Bloomberg

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