The Reserve Bank of Zimbabwe is optimistic about the gold-backed Zimbabwe Gold (ZiG) currency’s ability to stabilize against major currencies like the USD. Governor John Mushayavanhu asserts that strong monetary policies support the ZiG’s performance while implementing measures to allow businesses more pricing autonomy. Overall, the RBZ aims for de-dollarisation by 2030 and continues to work on establishing the ZiG as a stable economic pillar.
The Reserve Bank of Zimbabwe (RBZ) maintains its confidence in the gold-backed Zimbabwe Gold (ZiG) currency as a viable competitor against major currencies such as the United States dollar. During a recent Tourism Business Council of Zimbabwe (TBCZ) meeting, RBZ Governor John Mushayavanhu staunchly defended the ZiG, asserting that the robust monetary policies in place are ensuring its stability. He stated, “The ZiG to USD rate is firming up,” highlighting the ongoing confidence in the local currency as a primary goal of the central bank.
The ZiG was introduced in April of the previous year following severe exchange rate fluctuations and rampant inflation. The RBZ has adopted a strict monetary policy and high-interest rates to prevent speculative borrowing, aiming to establish long-lasting stability. Governor Mushayavanhu described the ziG currency as a cornerstone for the economy and reiterated that the de-dollarisation strategy is progressing towards the 2030 objective of reinstating a mono-currency system in Zimbabwe.
Many authorities, economists, and business leaders recognize the unsustainability of a US dollar-dominated economy. The strong US dollar is suppressing the competitiveness of local products internationally and limiting the RBZ’s ability to apply its monetary policy effectively. To boost confidence in the ZiG, the central bank permits businesses to set prices independent of the official exchange rate, allowing them to adjust prices according to market conditions.
Mushayavanhu clarified that the Financial Intelligence Unit (FIU) would not penalize businesses for pricing outside the official exchange rate, provided they maintain reasonable margins. He warned that businesses using unrealistic exchange rates would ultimately struggle in the market. Notably, some fuel traders have approached the RBZ, offering to sell fuel in ZiG to fulfill local commitments, indicating a gradual acceptance of the domestic currency.
Additionally, Governor Mushayavanhu assured that the priority remains avoiding fuel shortages, with future policies focused on economic stability. He dismissed calls for preferential foreign exchange access for capital projects. RBZ Deputy Governor Innocent Matshe remarked that a realistic exchange rate based on economic fundamentals should be positioned at US$1/ZiG22, a valuation anticipated to gain market acceptance.
In conclusion, the Reserve Bank of Zimbabwe’s commitment to the gold-backed ZiG currency reflects its strategic approach towards enhancing monetary stability against major currencies. Enhancements, such as the liberalization of pricing mechanisms and attentiveness to economic fundamentals, indicate a proactive stance on de-dollarisation while conceding the challenges posed by the US dollar-centric economy. The engagement of local businesses and the focus on sustainable practices further underscore the RBZ’s dedication to fostering a robust domestic currency and economic growth.
Original Source: www.newzimbabwe.com
