Zimbabwe has a new money called the ZiG. But, the value of this ZiG money has dropped by more than 40%. This happened because the country’s central bank made changes to try and match the official exchange rate with the unofficial market rates.
On Friday, Zimbabwe’s main bank said they would increase the official exchange rate. They changed it from 14 ZiG to around 24 ZiG per dollar. They did this to make it more similar to the rates people use outside of banks.
The ZiG was introduced in April to replace the old Zimbabwean dollar, which had lost 80% of its value in 2024. But, the ZiG has also had problems staying valuable.
The central bank says the main problem is the big difference between the official and unofficial market rates. The government wants people to use ZiG instead of the US dollar or cryptocurrencies like Bitcoin.
Sekai Kuvarika, the leader of the Confederation of Zimbabwean Industries, said that keeping the official rate low for so long was a bad idea. She pointed out that it made things in the economy confusing and difficult.
“This could have been better if we had controlled the unofficial market too,” she said.
Central Bank of Zimbabwe Says
After a meeting, the Central Bank of Zimbabwe said they will allow more flexibility in the exchange rate. This means the ZiG money could be worth different amounts depending on what people think it should be worth.
The government wants to make it so the official rates and unofficial rates are closer. They have tried many times to keep the local currency stable, and this is their sixth try since 2009.
But, there are still problems with how much people need and how much is available, making it difficult for the ZiG to work well.
The Governor of the Central Bank, John Mushayavanhu, said the issue is because of mismatches in supply and demand for foreign money. He also said the central bank is committed to a rate that reflects the actual market. “If the market wants ZiG to be worth less, we should let it happen to help reverse its decline.
Market Trends
- Since April 8, 2024, when ZiG started, it was worth around 12 ZiG per dollar. But, it has changed a lot and was anywhere between 13 and 14 ZiG per dollar in the following months.
- Before the central bank made changes on Friday, the unofficial market rate ranged from 18 to 25 ZiG per dollar. Now, the official rate is set to 24 ZiG per dollar.
This change is meant to make the economy more balanced and to make people trust the new money, ZiG, more.