Five months after it was introduced as its new legal tender, Zimbabwe’s President Emmerson Mnangagwa on Wednesday vowed to implement corrective measures to protect people’s incomes after the country’s new gold-backed currency slid on the black market.
The ZiG, short for Zimbabwe Gold, was devalued 43% last Friday after it lost nearly 47% on the black market.
“We note with concern the resurgence of the parallel market activities driven by speculative tendencies.
“Corrective measures are being instituted to protect Zimbabweans from disruptions,” Mnangagwa said in an address to the parliament.
Since the devaluation, the ZiG has again weakened from Friday’s rate of 24.3902 to 25.2824 on Wednesday, while on the black market, it has slipped to 32 per U.S. dollar.
Mnangagwa said the devaluation of the ZiG will allow “greater flexibility” and encourage people holding forex to trade on the official market.
“Government remains committed to backing the currency through setting aside 50% of royalties to build reserves,” he said.
The ZiG is the southern African country’s sixth attempt at a stable currency in 15 years after a bout of hyperinflation under former longtime leader Robert Mugabe.
Following a meeting with central bank officials, the Bankers Association of Zimbabwe on Wednesday said last week’s move would cause price hikes and weaken confidence.
