In a bid to tackle currency volatility and inflation driven by exchange rate fluctuations, the Zimbabwean government is preparing to launch a “structured currency” next week. This move comes as the nation grapples with economic challenges exacerbated by arbitrage.
Sources familiar with the matter revealed that outgoing Reserve Bank of Zimbabwe (RBZ) governor, John Mangudya, who was replaced by John Mushayavanhu, will oversee the launch of the new currency after the Easter holidays, likely on Friday.
The new currency, backed by the value of the ZiG, an RBZ gold-backed token, aims to stabilize the exchange rate and mitigate inflation. Mushayavanhu, as the incoming governor, will play a pivotal role in defending the currency and combating inflation.
The delay in the launch was attributed to the need to finalize arrangements to ensure the currency’s stability and support its value. The structured currency will be backed by precious metals like gold and foreign currency, and its value will be determined by the value of the ZiG.
The move towards a structured currency is seen as a response to Zimbabwe’s prolonged economic crisis marked by currency volatility, inflation, and economic mismanagement. Despite previous attempts to introduce the Zimbabwean dollar in 2019, the currency failed to maintain stability.
The new currency is expected to coexist with the US dollar, which will remain legal tender until 2030, according to government regulations. The launch of the structured currency aims to restore confidence and stability in the economy, providing a stable medium of exchange amidst ongoing economic challenges.
While the introduction of a structured currency presents a step towards monetary stability, its success will depend on effective implementation and addressing broader economic and political issues facing Zimbabwe.
A source said: “The new currency will be launched at the end of the week after the Easter holidays — on Friday. It was supposed to have been launched much earlier in the year when the monetary policy statement was due in January or February, but it was delayed. Then 28 March was set as the new date, but there were still certain things that were not yet in place. So next week is the new date. Its value will be determined by the value of the ZiG, an RBZ gold-backed token.
“The official appointment and the role of Mushayavanhu was also an issue. Prior to that there were issues of gold and United States dollar reserves accumulation which were supposed to be in place before its announcement. One of the functions of the RBZ is management of the country’s gold and foreign exchange assets. This was a key process is coming up with the structured currency.”
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