Zimbabwe on Friday unveiled a new currency, ZiG which the country said is backed by gold reserves, marking the latest move by President Emmerson Mnangagwa’s administration to address decades of monetary instability.
Mnangagwa announced following an inspection of the central bank’s vaults that Zimbabwe possessed adequate gold reserves to support the introduction of the new “structured currency,” although analysts raised doubts about the sufficiency of these reserves.
The currency transition comes amid the rapid depreciation of the current Zimbabwe dollar this year. Its value plummeted by three-quarters against the US dollar benchmark in 2024, marking five years since Mnangagwa’s ruling Zanu-PF party reintroduced a local currency following the devastation caused by hyperinflation in 2008.
Recent reports indicate that on the black market, the Zimbabwe dollar traded at approximately Z$36,000 to the US dollar, contrasting with an official rate of Z$26,000. David Mnangagwa, the president’s son and Zimbabwe’s deputy finance minister, attributed the steep decline to “anxiety and anticipation” surrounding the impending currency regime change.
However, analysts and economists argue that the situation reflects more profound issues, such as the government resorting to money printing to fund its expenditures. Ordinary Zimbabweans, who have endured years of economic turmoil, exhibit widespread distrust in the currency due to eroded purchasing power and savings.
In 2022, the government briefly experimented with minting 1-troy-ounce gold coins. Newly appointed Reserve Bank of Zimbabwe governor, John Mushayavanhu, disclosed that the bank possesses just over one tonne of gold in its domestic vaults and an additional 1.5 tonnes held offshore.
Meanwhile, Zimbabwe’s finance ministry reported that the government holds an additional $300 million in banks. Compared to its larger neighbor South Africa, which boasts about 125 tonnes of gold in reserve, Zimbabwe’s foreign exchange reserves remain significantly lower, providing barely one month of import cover.
