BUSINESS INSIDER
Inflation-hit Zimbabwe has a new currency — again.
Last week, the country’s central bank introduced a new gold-backed currency called Zimbabwe Gold, or ZiG, in an attempt to tame price gains that reached a seven-month high of 55% in March.
It’s the country’s sixth attempt at creating a new currency since 2008. The Zimbabwe dollar — the currency the country most recently used — has tanked 80% this year alone.
There’s been so little confidence in Zimbabwe’s local currency that about 80% of the country’s population transacts in the US dollar.
On Thursday, Zimbabwe’s central bank governor, John Mushayavanhu, said the country has real gold and mineral assets to back up the new ZiG currency. Mushayavanhu said Zimbabwe’s central bank holds 2.1 tons of gold and other assets, including diamonds, that are equivalent to 0.4 tons of gold, according to Voice of America.
The ZiG started trading on Monday at an exchange rate of 13.56 to the dollar set by the central bank.
Reservations about Zimbabwe’s new currency
There are reservations about the new ZiG currency.
In a note on Sunday, Hasnain Malik of research firm Tellimer wrote that Zimbabwe’s economy needs fundamental fixes like reductions in fiscal deficit and external debt, not a new currency.
