Zimbabweans have 21 days to exchange their old cash for new money, the central bank said.
Zimbabwe's central bank has introduced a new gold-backed “structural currency” to combat soaring inflation and stabilize the country's long-sluggish economy.
Reserve Bank of Zimbabwe Governor John Mushayabanhu told reporters in the capital Harare on Friday that the new currency, called Zim Gold (ZiG), will be backed by foreign currencies, gold and valuable minerals.
Mushayabanhu said ZiG will circulate in parallel with a basket of other currencies.
He said the central bank would also introduce a market-determined exchange rate.
“From today… banks will convert current Zimbabwean dollar balances into the new currency,” he said.
This movement is based on “simplicity, certainty, [and] He emphasized predictability in Zimbabwe's finances and introduced eight new banknotes ranging from 1 to 200 Jig.
The new banknote features a picture of a gold ingot being minted and Zimbabwe's famous Balancing Rock, which had already appeared on the old banknote.
Ms Mushayabanhu said Zimbabweans had 21 days to exchange their old cash for new money.
Will there be enough reserves to back a new currency?
The Zimbabwe dollar has lost almost 100 percent 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 poor performance has contributed to southern Africa's high inflation rate, which rose to triple digits last year but stood at 55% in March, according to official data.
Current inflation rates are adding to the 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.
The soaring prices are also bringing back memories of 2008, when hyperinflation got out of control and central banks even issued $100 trillion bills, which are now collector's items.
Amid these economic challenges, analysts are wondering whether Harare has enough reserves to adequately back the new currency, and whether the new currency could suffer from fluctuations in gold prices. is doubtful.
On Thursday, President Emmerson Mnangagwa inspected the central bank's vault, which Mr Mushayabanhu, who was appointed earlier this year, said was holding 1.1 tonnes of pure gold.
The bank also has about 1.5 tonnes overseas, as well as $100 million in cash and valuable minerals such as diamonds, which translates into another 0.4 tonnes of gold, Mushayabanhu said.
The total value of the reserves amounted to $285 million, which Mushayavanhu stressed “covers more than three times the amount of ZiG currency in circulation.”
Meanwhile, the central bank will also adopt tight monetary policy that links money supply growth to growth in gold and foreign exchange reserves, it added.