Zimbabwe’s President Emmerson Mnangagwa pledged on Wednesday to take action to safeguard citizens’ incomes after the country’s gold-backed currency, known as ZiG, sharply dropped in value on the black market five months post-launch.
Last Friday, the ZiG was devalued by 43% following a 47% loss on the parallel market.
“We are concerned about the resurgence of parallel market activities driven by speculation. Measures are being taken to protect Zimbabweans from these disruptions,” Mnangagwa said in a parliamentary address.
Since its devaluation, the ZiG has continued to decline, weakening from 24.3902 on Friday to 25.2824 by Wednesday, while on the black market, it has dropped to 32 per U.S. dollar.
Mnangagwa stated that the devaluation would promote “greater flexibility” and incentivize people holding foreign currency to use the official market.
He also emphasised the government’s commitment to backing the currency by allocating 50% of royalties to build reserves.
This marks Zimbabwe’s sixth attempt at a stable currency in 15 years, following years of hyperinflation during the rule of former leader Robert Mugabe.
The Bankers Association of Zimbabwe, after meeting with central bank officials, warned that the devaluation would lead to price increases and diminish public confidence.
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