Zimbabwe is replacing its collapsing local currency with Zimbabwe Gold (ZiG) aiming to finish off inflation and substituting the devastating local currency. This happened after there was a loss of over 70% of the Zimbabwean dollar value in just a single year and inflation that ended with an over 55% price pump.
According to the central bank manager, John Mushayavahu, the new currency will circulate alongside foreign currencies. As for the interest rate, the central bank decreased it from 130% to 20% and began the listing of ZiG using the gold rate and the previous rate.
Although disclosure may aim to bolster public trust, the total value of cash assets and gold reserves recorded by the central bank stands at $185 million and $100 million, respectively.
Banks are to convert their current Zimbabwean dollar balances into ZiG with immediate effect, while people will have 21 days to exchange their old notes and coins for new ones, the monetary policy statement said.
The central bank’s decision to raise the interest rate was preceded by months of negotiations between the official authorities and the government to avoid the current currency depreciation trend.
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