Zimbabwe is set to introduce a new currency to replace its struggling predecessor, which has been plagued by depreciation and rejection. The country hopes that this move will help address its ongoing currency crisis, which has been a symptom of its long-standing economic problems. The new currency, known as ZiG, will be backed by gold reserves and a basket of foreign currencies and will officially launch on Monday.
In recent weeks, the Zimbabwe dollar has come under intense pressure, making it one of the worst performing currencies in the world. Its value has declined by over 70% on the official market since January, with further drops seen in the thriving black market. Inflation has also been on the rise, increasing to 55.3% in March from 26.5% in December the previous year.
The Reserve Bank Governor, John Mushayavanhu, expressed concern that the local currency was losing ground as most transactions were being conducted in U.S. dollars, which are also legal tender in Zimbabwe. This prompted the government to give traders three weeks to exchange their old notes for the new currency to encourage widespread adoption of ZiG.
This latest currency announcement is part of a series of measures taken by the Zimbabwean government to address currency issues since the collapse of the Zimbabwe dollar in 2009. The government had to temporarily scrap its currency and adopt the U.S. dollar as legal tender before reintroducing a domestic note in 2016 despite facing continued volatility due to changes such as banning and later unbanning foreign currencies like
