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Zimbabwe's central bank on Friday introduced a new gold-backed “structural currency” to tackle soaring inflation and stabilize the country's long-sluggish economy.
Reserve Bank Governor John Mushayabanhu said the ZiG (short for Zimbabwe Gold) would replace the Zimbabwean dollar, which has lost value over the past year and boosted inflation.
“From today… banks will convert their current Zimbabwean dollar balances into the new currency,” he said while presenting a monetary policy statement.
ZiG is “fully fixed and fully backed” by a basket of reserves made up of foreign currencies and precious metals, primarily gold, he added.
He said the move was aimed at promoting “simplicity, certainty, (and) predictability” in Zimbabwe's financial affairs and would see the new banknotes issued in seven denominations from Jig 1 to Jig 200. He added that he had presented it.
The Zimbabwean dollar has lost almost 100% of its value against the US dollar over the past year.
On Friday, it was trading officially for about $30,000 versus its more coveted U.S. counterpart, and on the black market for $40,000, according to tracker Jim Price Check. It is said that
That slump has contributed to the southern African country's high inflation rate, which soared to triple digits last year but stood at 55% in March, according to official data.
This puts added pressure on the country's 16 million people, who are already grappling with widespread poverty, high unemployment and severe drought caused by the El Niño phenomenon.