Zimbabwe Launches New Gold-Backed Currency

Zimbabwe's Central Bank said on Friday (April 5) that the country is replacing its collapsing local currency with a new one backed by gold and foreign currency after months of monetary reform deliberations between the country's central bank and finance ministry.

Zimbabwe central bank governor, John Mushayavanhu, said the new currency, known as Zimbabwe Gold (ZiG), would circulate alongside foreign currencies.

The ZiG will be officially launched on April 8.

In 2019, Zimbabwe reissued its national currency again, but it still struggled to win the public's trust. So far this year, the Zimbabwean dollar has fallen more than 70% against the U.S. dollar. According to statistics, 80% of local transactions are conducted in foreign currency.

The country's central bank said it was "recalibrating" the main interest rate. The exchange rate for the new currency is 13.56 Zimbabwe Gold to the dollar.

The Reserve Bank of Zimbabwe said through a monetary policy announcement that the new currency's actual exchange rate was determined by the closing interbank exchange rate on April 5 and the London PM Fix price of gold on April 4.

Mushayawanhu told the reporters that the measures would have an impact on inflation.

The country's inflation rate currently stands at 55.3 percent.

The monetary policy announcement asked banks to immediately exchange Zimbabwean dollars into ZiG, while the general public has 21 days to exchange old notes and coins for new ones.

In addition, the Central Bank of Zimbabwe said the country's reserve assets contain $100 million in cash and $185 million worth of gold.